What Explains Differences in Smoking, Drinking, and Other Health-Related Behaviors? by David M. Cutler and Edward Glaeser. Published in volume 95, issue 2, pages 238-242 of American Economic Review, May 2005

Research on productivity change in health care has surged in recent years. This interest reflects both policy interest in the value of health care and improving data capabilities and methods for productivity research. Because of the central importance of quality change in health care, this research has directly or indirectly considered not only changes in the costs of producing health services (e.g., the cost of a hospital day), but also changes in the benefits of health services for patient health. Some studies have compared overall changes in population health to changes in aggregate medical expenditures. For example, recent studies by Kevin Murphy and Robert Topel (1999) and William Nordhaus (1999) suggest that the value to current and future generations of Americans of improvements in life expectancy in recent decades has exceeded $2 trillion per year. Accounting for the improvements in ageadjusted functional health that also appear to have occurred in recent decades (e.g., Kenneth Manton et al., 1997) makes the improvement in health even greater. Cutler and Elizabeth Richardson (1999) estimate that, even if only 25 percent of the overall improvement in health is attributable to medical care, then health-care productivity has risen. Yet translating this into health-care productivity calculations leaves many issues unresolved. It is not immediately clear how to determine the share of health improvements that result from medical care. Further, even if overall productivity improvements have been high, it is possible that many changes in health-care productivity have been less valuable. Identifying areas of high and low past and potential future productivity improvements would be helpful for guiding policymakers. For all of these reasons, much of the recent research on health-care productivity has focused on explicit analysis of costs and outcomes for certain common, serious health problems, where other factors can be controlled for and relevant inputs and health outcomes can be measured. In this paper, we review the state of the art of the evidence on health-care productivity. We first summarize a set of recent productivity studies of common conditions that account for a substantial fraction of overall medical spending. These studies also illustrate the range of methods that have been used in disease-level productivity studies. In general, the studies show rather substantial productivity gains in care. We then present new evidence on productivity of treatment for breast cancer, a disease that, at least in its most common forms in adults, many experts believe has seen little improvement in benefits of care over time. Considering cancer allows us to focus on a condition where there is no presumption that medical care has been worthwhile, and where there are a host of complex issues related to case-finding, the timing of diagnoses, and chronic care. We find that the treatment of cancer has had at best small productivity improvements. Outcomes have improved more on a per-case basis than when considering the population as a whole.

This paper examines the generational aspect of the current Medicare system and some stylized reforms. We find that the rates of return on Medicare for today's workers are higher than those for Social Security and that the Medicare system is shifting a greater share of the burden on future workers than is Social Security. Nonetheless, the rates of return on Medicare, using the Medicare Trustees assumptions, are still not that high--roughly 2 percent for today's youngest workers. But forecasting future Medicare expenditures is quite difficult. Under an alternative higher-cost baseline, which we consider plausible, rates of return for today's youngest workers will exceed 3 percent. Putting Medicare on a sustainable basis by raising the payroll tax or reducing benefits would greatly reduce the rate of return for today's workers. Under the Trustees assumptions, for example, the payroll tax would have to be increased by 2.0 percent of payroll to put the Medicare system in balance in perpetuity. This policy would reduce the rate of return on today's youngest workers to about 1.3 percent.

There is a great deal of geographic variation in Medicare spending. For example, while the average Medicare cost per beneficiary was around $5200 in 1996, Medicare spending, adjusted for diffences in regional prices and demographic composition, was about $8000 per person in Miami, but only $3500 in Minneapolis. In this paper, we explore the source of this variation. We find that a substantial amount can be explained by differences across areas in the health of the elderly population. This finding suggests that some of the geographic variation in Medicare spending is efficient. But even accounting for differences in the health of the population, significant variation remains. We have been able to explain some of the remaining variation. The strongest factors are supply variables: for-profit hospitals and specialist physicians both increase Medicare spending. If these factors are exogenous, public policy may want to consider the supply of medical services more than it currently does. We do not find that expensive places spend a disproportionate amount on those near death.

This paper presents evidence on the characteristic speculative dynamics of returns on stocks, bond, foreign exchange, real estate, collectibles, and precious metals. It highlights four stylized facts. First, returns tend to be positively serially correlated at high frequency. Second, they are weakly negatively serially correlated over long horizons. Third, deviations of asset values from proxies for fundamental value have predictive power for returns. Fourth, short term interest rates are negatively correlated with excess returns on other assets. The similarity of the results across markets suggests that they may be due to inherent features of the speculative process.

This paper uses decennial Census data to examine the residential integration of the foreign born in the United States between 1910 and 2000. Immigrant segregation declined in the first part of the century, but has been rising over the past few decades. Recent immigrants tend to hail from countries with greater cultural distinctions from U.S. natives, whether economic, racial, or linguistic. These factors explain much of the increase in segregation after 1970. Evidence also points to changes in urban form, particularly native-driven suburbanization and the decline of public transit as a transportation mode, as an explanation for the new immigrant segregation.

This paper examines segregation in American cities from 1890 to 1990. We divide the century into three time periods. From 1890 to 1940, ghettos were born as blacks migrated to urban areas and cities developed vast expanses filled with nearly exclusively black housing. From 1940 to 1970, black migration continued and ghettos expanded. Since 1970, there has been a decline in segregation as blacks have moved to suburban areas and central cities have become less segregated. Across all of these time periods there is a strong positive relation between urban population or density and segregation. We then examine why segregation has varied so much over time. We find evidence that the mechanism sustaining segregation has changed. In the mid-20th century taken by whites to exclude blacks from their neighborhoods. By 1990, these legal barriers enforcing segregation had been replaced by decentralized racism, where whites pay more than blacks to live in predominantly white areas.

Preference Heterogeneity and Insurance Markets: Explaining a Puzzle of Insurance by David M. Cutler, Amy Finkelstein and Kathleen McGarry. Published in volume 98, issue 2, pages 157-62 of American Economic Review, May 2008