Reducing Inequality Through Dynamic Complementarity: Evidence from Head Start and Public School Spending by Rucker Johnson, C. Kirabo Jackson :: SSRN

June 24, 2017

We explore whether early childhood human-capital investments are complementary to those made later in life. Using the Panel Study of Income Dynamics, we compare the adult outcomes of cohorts who were differentially exposed to policy-induced changes in pre-school (Head Start) spending and school-finance-reform-induced changes in public K12 school spending during childhood, depending on place and year of birth. Difference-in-difference instrumental variables and sibling-difference estimates indicate that, for poor children, increases in Head Start spending and increases in public K12 spending each individually increased educational attainment and earnings, and reduced the likelihood of both poverty and incarceration in adulthood. The benefits of Head Start spending were larger when followed by access to better-funded public K12 schools, and the increases in K12 spending were more efficacious for poor children who were exposed to higher levels of Head Start spending during their preschool years. The findings suggest that early investments in the skills of disadvantaged children that are followed by sustained educational investments over time can effectively break the cycle of poverty.

Source: Reducing Inequality Through Dynamic Complementarity: Evidence from Head Start and Public School Spending by Rucker Johnson, C. Kirabo Jackson :: SSRN

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The Life-Cycle Benefits of an Influential Early Childhood Program by Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados :: SSRN

March 6, 2017

This paper estimates the long-term benefits from an influential early childhood program targeting disadvantaged families. The program was evaluated by random assignment and followed participants through their mid-30s. It has substantial beneficial impacts on health, children’s future labor incomes, crime, education, and mothers’ labor in- comes, with greater monetized benefits for males. Lifetime returns are estimated by pooling multiple data sets using testable economic models. The overall rate of return is 13.7% per annum, and the benefit/cost ratio is 7.3. These estimates are robust to numerous sensitivity analyses.

Source: The Life-Cycle Benefits of an Influential Early Childhood Program by Jorge Luis García, James J. Heckman, Duncan Ermini Leaf, María José Prados :: SSRN


Healthcare Spending and Utilization in Public and Private Medicare by Vilsa Curto, Liran Einav, Amy Finkelstein, Jonathan Levin, Jay Bhattacharya :: SSRN

February 12, 2017

We compare healthcare spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their healthcare spending. Healthcare spending is 25 percent lower for MA enrollees than for enrollees in traditional Medicare (TM) in the same county with the same risk score. Spending differences between MA and TM are similar across sub-populations of enrollees and sub-categories of care, with similar reductions for “high value” and “low value” care. Spending differences primarily reflect differences in healthcare utilization; spending per encounter and hospital payments per admission are very similar in MA and TM. Geographic variation in MA spending is about 20 percent higher than in TM, but geographic variation in hospital prices is about 20 percent lower. We present evidence consistent with MA plans encouraging substitution to less expensive care, such as primary rather than specialist care, and outpatient rather than inpatient surgery, and with employing various types of utilization management. Some of the overall spending differences between MA and TM may be driven by selection on unobservables, and we report a range of estimates of this selection effect using mortality outcomes to proxy for selection.

Source: Healthcare Spending and Utilization in Public and Private Medicare by Vilsa Curto, Liran Einav, Amy Finkelstein, Jonathan Levin, Jay Bhattacharya :: SSRN


Rankings of Unwarranted Variation in Healthcare Treatments by Herry Moes, R.C.M. Brekelmans, Herbert Hamers, Fleur Hasaart :: SSRN

February 10, 2017

In this paper, we introduce a framework designed to identify and rank possible unwarranted variation of treatments in healthcare. The innovative aspect of this framework is a ranking procedure that aims to identify healthcare institutions where unwarranted variation is most severe, and diagnosis treatment combinations which appear to be the most sensitive to unwarranted variation. By adding a ranking procedure to our framework, we have taken our research a step beyond the existing literature. This ranking procedure is intended to assist health insurance companies in their search for violations, and to help find them more quickly, enabling more effective corrective and preventive actions on behalf of the healthcare institutions concerned.

Source: Rankings of Unwarranted Variation in Healthcare Treatments by Herry Moes, R.C.M. Brekelmans, Herbert Hamers, Fleur Hasaart :: SSRN


Impacting Entry into Evidence-Based Supported Employment: A Population-Based Empirical Analysis of a Statewide Public Mental Health Program in Maryland by David S. Salkever, Michael Abrams, Kevin Baier, Brent Gibbons :: SSRN

February 10, 2017

Access to evidence-based supported employment (SE) services for persons with serious mental illness is limited in the U.S., despite evidence such services are effective and could benefit more persons. Major barriers to SE expansion are overlapping and limited funding streams, and interagency coordination problems. An important recent initiative in one state (Maryland) addressed both types of barriers. This longitudinal analysis of SE take-up probabilities for population-based cohorts of Medicaid recipients, during 2002-2010, provided tentative evidence of initiative impacts (particularly during the recession downturn), and evidence of effects for a schizophrenia diagnosis, prior work-history, health and demographic characteristics, and geographic accessibility.

Source: Impacting Entry into Evidence-Based Supported Employment: A Population-Based Empirical Analysis of a Statewide Public Mental Health Program in Maryland by David S. Salkever, Michael Abrams, Kevin Baier, Brent Gibbons :: SSRN


Why Are Some Households So Poorly Insured? by John Gathergood, Daniel Wylie :: SSRN

February 8, 2017

We explore how households insure themselves against consumption volatility. We asked households how they would fund an unexpected emergency consumption expense equivalent to one month’s income. Answers reveal a range of consumption insurance mechanisms, including borrowing from credit markets and social networks. Despite this, more than one quarter of households have no plan to insure their consumption. The likelihood of non-insurance increases with poor financial literacy and is highest among households most at risk of experiencing a financial shock. Among these households we see large effects of poor financial literacy on non-insurance.

Source: Why Are Some Households So Poorly Insured? by John Gathergood, Daniel Wylie :: SSRN


Second‐Degree Moral Hazard in a Real‐World Credence Goods Market by Loukas Balafoutas, Rudolf Kerschbamer, Matthias Sutter :: SSRN

February 8, 2017

In a field experiment in the market for taxi rides we investigate a phenomenon called second‐degree moral hazard – the tendency of the supply side in a market to react to anticipated moral hazard on the demand side by increasing the extent or price of the service. Our moral hazard manipulation consists of some passengers explicitly stating that their expenses will be reimbursed. This has a strong positive effect on the likelihood and the amount of overcharging and consequently increases consumer expenditure. Our results suggest that second‐degree moral hazard may have a severe impact on the provision of credence goods [this would include medical care].

Source: Second‐Degree Moral Hazard in a Real‐World Credence Goods Market by Loukas Balafoutas, Rudolf Kerschbamer, Matthias Sutter :: SSRN