1. A useful documentary ("The Flaw") on the economic crisis aired last night. Featuring the likes of Robert Shiller, Robert Frank, Joseph Stiglitz and Dan Ariely. See http://theflawmovie.com/.
2. In reference to the above, the Slingbox is a very useful invention for anyone traveling frequently or living abroad who wants to be able to watch tv in their home country.
3. Interesting paper combining the important areas of price elasticity of demand with respect to health expenditure and myopia.
Moral hazard in health insurance: How important is forward looking behavior?
Aviva Aron-Dine, Liran Einav, Amy Finkelstein, and Mark Culleny
Abstract
We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our primary empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial (spot) price of medical care but a higher expected end-of-year (future) price relative to employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically signi…ficant elasticity of (initial) medical utilization with respect to the future price of -0.2 to -0.6. To try to assess the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using data from the RAND Health Insurance Experiment. Our calibration exercise suggests that the elasticity we estimated is substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically signi…ficant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.
4. Paper on the consumption value of higher education.
The Consumption Value of Postsecondary Education
Brian Jacob, Brian McCall, Kevin Stange,
http://isites.harvard.edu/fs/docs/icb.topic964076.files/College%20Consumption%20Nov%202%202011.pdf
Abstract
Education provides both investment and consumption benefits; the former being realized after schooling is completed but the latter accruing only while schooling is actually taking place. In this paper, we quantify the importance of consumption value considerations to schooling decisions in the context of higher education and examine the implications for colleges’ strategies for attracting students. To do so, we estimate a discrete choice model of college demand using micro data from the high school classes of 1992 and 2004, matched to extensive information on all four-year colleges in the U.S. We find that most students do appear to value college attributes which we categorize as “consumption,” including college spending on student activities, sports, and dormitories. In fact, students appear to be more willing to pay for these non-academic aspects of colleges than typical academic aspects, such as spending on instruction. Estimates suggest that this taste for consumption amenities is broad-based among many student groups, whereas taste for academic quality is confined only to the high achieving. Consequently, policies that reallocate financial resources away from these non-academic aspects to instruction would not enable most schools to attract more or better students, as some policy-makers suggest. However, since student preferences for college attributes are very heterogeneous different colleges face very different incentives for changing their characteristics depending on their current student body and those they are trying to attract.
Our empirical approach makes a number of improvements on existing literature, including accounting for unobserved choice set variability created by selective admissions, controlling for fixed unobserved differences between schools and price discounting, and permitting greater preference heterogeneity.
2. In reference to the above, the Slingbox is a very useful invention for anyone traveling frequently or living abroad who wants to be able to watch tv in their home country.
3. Interesting paper combining the important areas of price elasticity of demand with respect to health expenditure and myopia.
Moral hazard in health insurance: How important is forward looking behavior?
Aviva Aron-Dine, Liran Einav, Amy Finkelstein, and Mark Culleny
Abstract
We investigate whether individuals exhibit forward looking behavior in their response to the non-linear pricing common in health insurance contracts. Our primary empirical strategy exploits the fact that employees who join an employer-provided health insurance plan later in the calendar year face the same initial (spot) price of medical care but a higher expected end-of-year (future) price relative to employees who join the same plan earlier in the year. Our results reject the null of completely myopic behavior; medical utilization appears to respond to the future price, with a statistically signi…ficant elasticity of (initial) medical utilization with respect to the future price of -0.2 to -0.6. To try to assess the extent of forward looking behavior, we develop a stylized dynamic model of individual behavior and calibrate it using data from the RAND Health Insurance Experiment. Our calibration exercise suggests that the elasticity we estimated is substantially smaller than the one implied by fully forward-looking behavior, yet it is sufficiently high to have an economically signi…ficant effect on the response of annual medical utilization to a non-linear health insurance contract. Overall, our results point to the empirical importance of accounting for dynamic incentives in analyses of the impact of health insurance on medical utilization.
4. Paper on the consumption value of higher education.
The Consumption Value of Postsecondary Education
Brian Jacob, Brian McCall, Kevin Stange,
http://isites.harvard.edu/fs/docs/icb.topic964076.files/College%20Consumption%20Nov%202%202011.pdf
Abstract
Education provides both investment and consumption benefits; the former being realized after schooling is completed but the latter accruing only while schooling is actually taking place. In this paper, we quantify the importance of consumption value considerations to schooling decisions in the context of higher education and examine the implications for colleges’ strategies for attracting students. To do so, we estimate a discrete choice model of college demand using micro data from the high school classes of 1992 and 2004, matched to extensive information on all four-year colleges in the U.S. We find that most students do appear to value college attributes which we categorize as “consumption,” including college spending on student activities, sports, and dormitories. In fact, students appear to be more willing to pay for these non-academic aspects of colleges than typical academic aspects, such as spending on instruction. Estimates suggest that this taste for consumption amenities is broad-based among many student groups, whereas taste for academic quality is confined only to the high achieving. Consequently, policies that reallocate financial resources away from these non-academic aspects to instruction would not enable most schools to attract more or better students, as some policy-makers suggest. However, since student preferences for college attributes are very heterogeneous different colleges face very different incentives for changing their characteristics depending on their current student body and those they are trying to attract.
Our empirical approach makes a number of improvements on existing literature, including accounting for unobserved choice set variability created by selective admissions, controlling for fixed unobserved differences between schools and price discounting, and permitting greater preference heterogeneity.
1 comment:
I saw Brian McCall give that paper on the consumption value of higher education in Lisbon, earlier this year.
The paper is worth reading; as is his blog on the economics of education:
http://mccalleconeduc.blogspot.com/
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