Knowledge that Transforms

Hospital quality measures are crucial to a key idea behind health care payment reforms: "paying for quality" instead of quantity. Nevertheless, such measures face major criticisms largely over the potential failure of risk adjustment to overcome endogeneity concerns when ranking hospitals. In this paper we test whether patients treated at hospitals that score higher on commonly-used quality measures have better health outcomes in terms of rehospitalization and mortality. To compare similar patients across hospitals in the same market, we exploit ambulance company preferences as an instrument for hospital choice. We find that a variety of measures used by insurers to measure provider quality are successful: choosing a high-quality hospital compared to a low-quality hospital results in 10-15% better outcomes.

Do information frictions in health care markets lead to higher prices and price dispersion? Focusing on medical imaging procedures, this paper examines the equilibrium effect of a unique statewide price transparency website. Price information leads to a shift to lower-cost providers, especially for patients subject to a deductible. Furthermore, supply-side effects play a significant role in the long run, benefiting all insured individuals. Supply-side effects reduce price dispersion and are especially relevant in concentrated markets. These effects are important given that high prices are thought to be a primary cause of high private health care spending.

Combining data on locations with career and educational histories of mathematicians, we study how distance and ties affect citation patterns. The ties considered include coauthorship, past colocation, and relationships mediated by advisers and the alma mater. With fixed effects capturing subject similarity and article quality, we find linkages are strongly associated with citation. Controlling for ties generally halves the negative impact of geographic barriers on citations. Ties matter more for less prominent and more recent papers and have retained their quantitative importance in recent years. The impact of distance, controlling for ties, has fallen and is statistically insignificant after 2004.

This paper studies the causal effect of education on decision making. In 1972, England raised its minimum school-leaving age from 15 to 16 for students born after September 1, 1957. An online survey was conducted with 2,700 individuals born in a 36-month window on either side of this date. Participants made 25 incentivized risk choices that allow us to measure multiple dimensions of decision making. Despite the policy having effects on education, educational qualifications, and income, we find no effects of the policy on decision making or decision-making quality.

In the aftermath of the consumer debt–induced recession, policymakers have questioned whether fiscal stimulus is effective during periods of high consumer indebtedness. This study empirically investigates this question. Using detailed data on Department of Defense spending for the 2007–2009 period, we document that the open-economy relative fiscal multiplier is higher in geographies with higher consumer debt. The results suggest that in the short term (2007–2009), fiscal policy can mitigate the adverse effect of consumer (over)leverage on real economic output during a recession. We then exploit detailed microdata to show that both heterogeneous marginal propensities to consume and slack-driven economic mechanisms contribute to the debt-dependent multiplier.

Many settings in empirical economics involve estimation of a large number of parameters. In such settings, methods that combine regularized estimation and data-driven choices of regularization parameters are useful. We provide guidance to applied researchers on the choice between regularized estimators and data-driven selection of regularization parameters. We characterize the risk and relative performance of regularized estimators as a function of the data-generating process and show that data-driven choices of regularization parameters yield estimators with risk uniformly close to the risk attained under the optimal (unfeasible) choice of regularization parameters. We illustrate using examples from empirical economics.

Environmental Engel curves (EECs) describe households’ incomes and the pollution necessary to produce the goods and services they consume. We calculate 29 annual EECs from 1984 to 2012 for point-source air pollutants in the United States, revealing three clear results: EECs slope upward, have income elasticities less than 1, and shift down over time. Even without changes to production techniques, pollution would have declined despite growing incomes. This improvement can be attributed about equally to two trends: household income growth represented by movement along inelastic EECs and economy-wide changes represented by downward shifts in EECs over time.

How effective are policies aimed at integrating isolated regions? We answer this question in the context of a highway system in one of the poorest regions in the United States. With construction starting in 1965, the Appalachian Development Highway System (ADHS) ultimately consisted of over 2,500 high-grade road miles. We use a simple model of interregional trade to motivate our empirical analysis, which quantifies the relationship between market access and income. We then calibrate the model to evaluate the aggregate impact of the ADHS and compare this with alternative counterfactual proposals. We find that removing the ADHS would have reduced total income by $53.7 billion in the United States, with $22 billion of the losses in Appalachian counties. Our findings highlight the potential aggregate benefits of transportation infrastructure policies and suggest that leakage outside the targeted area may be substantial.

We examine the effect of radiation exposure in utero, resulting from nuclear weapon testing in the 1950s and early 1960s, on long-run outcomes of Norwegian children. Exposure to low-dose radiation, specifically during months 3 and 4 in utero, leads to lower IQ scores for men and lower education attainment and earnings among men and women. Children of persons affected in utero also have lower cognitive scores, suggesting a persistent intergenerational effect of the shock to endowments. Given the lack of awareness about nuclear testing in Norway at this time, our estimates are likely unaffected by avoidance behavior or stress effects.

We study the economic effects of place-based policies in the housing market, by investigating the effects of a place-based program on prices of surrounding owner-occupied properties. The program improved the quality of public housing in 83 impoverished neighborhoods throughout the Netherlands. We combine a first-difference approach with a fuzzy regression-discontinuity design to address the fundamental issue that these neighborhoods are endogenously treated. Improvements in public housing induced surrounding housing prices to increase by 3.5%. The program's external benefits are sizable and at least half of the value of investments in public housing.