In 2007, the Consumer Product Safety Commission issued 212 recalls of toys and other children's products, a sizable increase from previous years. We investigate changes in toy sales following these recalls. We find that for manufacturers that had recalls, unit sales of the types of toys involved in the recall fell relative to their sales of toys in other categories. We do not find evidence of within-manufacturer spillovers to dissimilar toys. We do, however, find large industry-wide spillovers in the form of sales losses to manufacturers that did not experience any recalls. Our results shed light on how consumers may draw inferences from information about product safety.

Covariate-adjusted cross-sectional comparisons show that Medicaid patients have worse health outcomes than other patients. We evaluate the validity of this research design for estimating the causal effect of Medicaid on mortality. Even after controlling for common covariates, Medicaid patients have worse preoperative health and lower socioeconomic status than privately insured patients. Controlling for additional variables shrinks the mortality differences but still does not eliminate imbalance in other predetermined variables. These results can be explained by fairly weak assumptions about unmeasured confounders. We conclude that cross-sectional observational methods do not produce valid causal estimates of Medicaid’s mortality effects.