The Incidental Economist

The Federal Employees Health Benefits Program: What Lessons Can It Offer Policymakers? a National Health Policy Forum Issue Brief.

Inside the Refrigerator: Immigration Enforcement and Chilling Effects in Medicaid Participation, by Tara Watson.

Economists have puzzled over why eligible individuals fail to enroll in social safety net programs. “Chilling effects” arising from an icy policy climate are a popular explanation for low program take-up rates among immigrants, but such effects are inherently hard to measure. This paper investigates a concrete determinant of chilling, Federal immigration enforcement, and finds robust evidence that heightened enforcement reduces Medicaid participation among children of non-citizens. This is the case even when children are themselves citizens and face no eligibility barriers to Medicaid enrollment. Immigrants from countries with more undocumented U.S. residents, those living in cities with a high fraction of other immigrants, and those with healthy children are most sensitive to enforcement efforts. Up to seventy-five percent of the relative decline in non-citizen Medicaid participation around the time of welfare reform, which has been attributed to the chilling effects of the reform itself, is explained by a contemporaneous spike in immigration enforcement activity. The results imply that safety net participation is influenced not only by program design, but also by a broader set of seemingly unrelated policy choices.

Pricing and Reimbursement in U.S. Pharmaceutical Markets, by Ernst R. Berndt, Joseph P. Newhouse.

In this survey chapter on pricing and reimbursement in U.S. pharmaceutical markets, we first provide background information on important federal legislation, institutional details regarding distribution channel logistics, definitions of alternative price measures, related historical developments, and reasons why price discrimination is highly prevalent among branded pharmaceuticals. We then present a theoretical framework for the pricing of branded pharmaceuticals, without and then in the presence of prescription drug insurance, noting factors affecting the relative impacts of drug insurance on prices and on utilization. With this as background, we summarize major long-term trends in copayments and coinsurance rates for retail and mail order purchases, average percentage discounts off Average Whole Price paid by third party payers to pharmacy benefit managers as well as average dispensing fees, and generic penetration rates. We conclude with a summary of the evidence regarding the impact of the 2006 implementation of the Medicare Part D benefits on pharmaceutical prices and utilization, and comment on very recent developments concerning the entry of large retailers such as Wal-Mart into domains traditionally dominated by large retail chains and the “commoditization” of generic drugs.

[book] Parentonomics: An Economist Dad Looks at Parenting, by Joshua Gans. From the book’s website:

In Parentonomics: An Economist Dad Looks at Parenting, Professor Joshua Gans wonders what it would be like to apply key economic principles to raising his own three children. Can incentives and rewards prompt them to do things like sleep through the night, eat healthy meals, clean up their rooms, do their homework? Can economics help the smart, caring, well-adjusted, high-achieving little person that we know is in there to emerge?

Parentonomics shows that bringing together the hard questions of economics with the chaos, mess and love that children inspire makes a wonderful combination.

Antitrust and competition in health care markets, by Martin Gaynor and William Vogt. It’s long. But the first three sections are less than ten pages and beautifully document how health care markets are different than those of other goods and services.

In this chapter we review issues relating to antitrust and competition in health care markets. The chapter begins with a brief review of antitrust legislation. We then discuss whether and how health care is different from other industries in ways that might affect the optimality of competition. The chapter then focuses on the main areas in which antitrust has been applied to health care: hospital mergers, monopsony, and foreclosure. In each of these sections we review the relevant antitrust cases, discuss the issues that have arisen in those cases, and then review the relevant economics literature and suggest some new methods for analyzing these issues.

Hospital-insurer bargaining: an empirical investigation of appendectomy pricing, by Brooks, Dor, and Wong.

Employers’ increased sensitivity to health care costs has forced insurers to seek ways to lower costs through effective bargaining with providers. What factors determine the prices negotiated between hospitals and insurers? The hospital-insurer interaction is captured in the context of a bargaining model, in which the gains from bargaining are explicitly defined. Appendectomy was chosen because it is a well-defined procedure with little clinical variation. Our results show that certain hospital institutional arrangements (e.g. hospital affiliations), HMO penetration, and greater hospital concentration improve hospitals’ bargaining position. Furthermore, hospitals’ bargaining effectiveness has diminished over time and varies across states.

[book] The Heart of Power: Health and Politics in the Oval Office, by David Blumenthal. Here’s a bit from the NY Times review by Robert Reich:

This timely and insightful book puts Barack Obama’s current quest for universal health insurance in historical context and gives new meaning to the audacity of hope. Universal health care has bedeviled, eluded or defeated every president for the last 75 years. …

David Blumenthal, a professor at Harvard Medical School and an adviser to Barack Obama, and James A. Morone, a professor of political science at Brown University, skillfully show how the ideal of universal care has revolved around two poles. In the 1930s, liberals imagined a universal right to health care tied to compulsory insurance, like Social Security. Johnson based Medicare on this idea, and it survives today as the “single-payer model” of universal health care, or “Medicare for all.”

Jane Roper (and her readers in comments), responded to my question about the level of parental participation at concerts with “kid friendly” music. She sees both sides, naturally given her husband’s trade (performer) and the fact that she’s often an audience member. Her take:

I don’t particularly like to be forced to sing or dance or act like a chicken or hop like a bunny if I don’t feel like it, or if it makes me feel like an idiot. And I don’t like when performers lay on a guilt trip …

I do think that it sucks when parents ignore the performance or their children completely — using the time to chat with each other or mess around on their Blackberry. I think it’s totally disrespectful to the performer, and sets a bad example for kids.

Jane, and her kids’-concert-performing husband Alastair Moock says the entertainer has some responsibilities here too: don’t belittle the parents.

Alastair does try to engage parents. He may ask them to sing, or invite them to do the motions that go with a particular song. But — as he pointed out when we talked about this — only if it doesn’t infantilize them. … He isn’t going to ask them to do something idiotic.

It’s at the core of what he believes and tries to do when it comes to making music for kids and families: it shouldn’t condescend to kids, nor should it infantalize adults. (Or drive them crazy.)

Agreed. Here’s my offer to performers: You don’t insist I crawl around on the ground making barnyard noises, and I’ll refrain from checking my e-mail. Seriously though, if the music is good and the kids are having fun, I’ll be more inclined to enjoy it with them one way or another. Sometimes the best way to enjoy it is to sit back and watch the show. I think that’s OK, so long as it doesn’t involve disrespecting the performer.

Good advice Jane!

One of the greatest sources of joy and frustration as a parent is observing my children’s cognitive development. It is fascinating, but the gap between what is observable and what is actually going on inside those cute little noggins is agonizingly large.

To attempt to close that gap, I’ve done a lot of child psych reading over the half-dozen or so years I’ve been a father. I try to stay several steps ahead of my kids. To that end, I just finished The Primal Teen, by Barbara Strauch.* As its title suggests, the book is about teenagers, in particular about what the latest science can tell us about their brains, how they change over the teen years, and what those changes imply for behavior, mood, reasoning, and so forth.

I’m not going to tell you a lot about Primal Teen other than to recommend it as a worthwhile read if your future (or current) life will involve cohabitation with a teenager. You can read a more complete summary and review of Primal Teen elsewhere. For example, in his review posted at Evalu8, Michael Valpy wrote,

[T]he shibboleth of attributing teenagers’ aberrant and flaky behaviour to hormones is, at the very least, an incomplete explanation.

In fact, the adolescent brain goes through a biological remodelling as critical to human development as that which takes place during the first two years of life — a discovery with profound implications for educators, behavioural scientists, pediatric health professionals and, with luck, bewildered and desperate parents.

Virtually every particle of the teenage brain is under reconstruction: Nodes, lobes, neurons, synapses, the long strings of axons that are the pathways for electrical signals speeding (or, in the case of teenagers, jolting and backfiring) from one part of the brain to another and the itsy-bitsy dendrites that carry chemical messages between neurons.

Nature should post “Sorry for the inconvenience” signs on their foreheads. (Bold mine.)

In fact, I found Primal Teen to be of some help in appreciating what my young children experience and in being more forgiving when they torture me with their, well, childishness. While under heavy and sustained fire of screeching, whining, and demands it is easy to forget that kids, young and old, are captives of their own developing brains. Are they really unable to appreciate how insane they behave? Yes, they really are!

So, I say to myself, relax. They’re nuts, but they don’t mean it personally. And they’ll outgrow it. Just keep them safe and try not to say anything you’ll regret.

While I’m talking popular child psych books, here are a few others I’ve read, with my brief reactions (look elsewhere for thorough reviews).

The Magic Years, by Selma H. Fraiberg: A fascinating journey into the anxieties of the first six years of childhood. This is an old (1959) classic. It wouldn’t surprise me if some of the ideas are out of fashion or discredited. But it doesn’t matter. The point, for me, wasn’t to diagnose my children. It was only to appreciate that a lot of their behavior is driven by the challenges of major milestones (separating, potty training, verbal communication, the development of self) and the anxieties they can provoke. When my kid is acting up, day after day, in ways never previously observed it is enormously helpful to realize that she is probably feeling anxious about starting kindergarten, though she can’t express it (because she doesn’t consciously know it).

Raising An Emotionally Intelligent Child, by John Gottman and Joan Declaire: I barely thought about emotional intelligence before reading this book. Since parenthood is (or so far seems to be) far more about navigation of emotional waters than anything else, this book was of immense value. Actually, I haven’t revisited this book in several years so it’s probably time to take another look.

Baby Minds, by Linda Acredo and Susan Goodwyn: This is a book of games to play with kids up to age three. The authors claim (and cite evidence) that the games assist with cognitive development. Maybe they do, maybe they don’t. Doesn’t matter. Kids love them. This book gave me some good ideas.

A Thousand Days of Wonder, by Charles Fernyhough: I love the idea of this book, but didn’t actually like the book. Fernyhough is a developmental psychologist, and the book is a close observation of his daughter’s cognitive development through age three. I can imagine it was great fun for Fernyhough. It’d be as if I had a young health care system all my own to observe, nurture, and help shape. Endless fascination! But I found the prose overwritten, as if Fernyhough was trying to make his journey seem deep and significant. He needn’t have worked so hard. The first three years of a child’s life and of fatherhood are deep and significant all by themselves. I only read the first 50 pages or so. (By the way, Fernyhough does have a lot of interesting things to say. Hear him on a recent episode of Radiolab.)

* Barbara Strauch also wrote a book about the middle-age brain, The Secret Life of the Grown-up Brain. I look forward to reading it, not to understand my kids, but to understand my parents and my not-too-distant future self. 

Yesterday was kind of busy and serious on the blog with a lot of good posts (go back and look if you missed them). I’ll start today off with something a little less political (or maybe not):

I’m a parent of two children under 6. That means (a) I am tired; (b) I attend a lot of concerts for children and families; And (c) I think my kids are incredibly cute, especially when dancing.

So, when I attend a concert with my kids I’d prefer to sit back, relax, and watch my kids do their cute dances as the entertainer entertains them. But sometimes the performer has other ideas. Some want me to get involved, sing along, jump, clap, etc. Some of them really lay on a guilt trip. Do I have to do the hokey pokey? Really? It’s not break time for me? (To be fair, many performers don’t suggest parents do a thing. I really like them, so long as the kids do.)

On the other hand, maybe the performers are right. Maybe if the parents don’t seem enthusiastic about the music then kids will enjoy it less and think it less important. Or maybe the performers consider it their job to create a family experience.

I’d like to hear about this issue from a kid/family concert performer’s perspective. I know one (Alastair Moock), and his wife Jane Roper blogs at Baby Squared. Jane, Alastair, what do you think?

I receive a letter every month from NationalGrid, my electricity supplier. It includes a graph like the one below (which I think was from my March letter) along with the explanation that the “all neighbors” figure was an average of monthly electricity usage for the 100 nearest homes, and the “efficient neighbors” figure was the monthly average of the 20 homes out of those 100 that used the least electricity.

When I saw this graph I was shocked that my home’s electricity usage was not anywhere near that of the efficient group. We pride ourselves on energy efficiency in my home. We’ve invested considerably to reduce our carbon footprint. Why aren’t we more efficient relative to our neighbors?

Then I realized I was beating myself up for no good reason. The graphic that NationalGrid sent me wasn’t that informative. Selecting the 20 most efficient of our 100 nearest neighbors doesn’t make for a fair comparison. There are likely many significant differences between my family and those in that group, including family size and number of hours per week at home (our small children are at home with a parent part of the work week). Without adjusting for such things I don’t think NationalGrid is providing a worthwhile comparison.

I still would like to use less energy. I don’t need NationalGrid to remind me to do so, but I appreciate their effort. I just wish the figures were a little more targeted. No doubt some folks actually change their behavior based on these NationalGrid mailings. There is some evidence that these type of “nudge” letters do contribute toward reduced energy use, a little.

With two girls under six in my house, Silly Bandz are all the rage. According to the Wall Street Journal, they’re the latest little kid fad, and earning they’re maker big-time revenue:

BCP Imports LLC, maker of the Silly Bandz bracelets that have become an accessory de rigueur on elementary school playgrounds, is the latest small company looking for a way to extend its appeal with pint-sized customers.

Retailers selling the packs of 24 bracelets for $5 to $7 a pop cannot keep them in stock, and the company has had to hire more than 350 employees since October, according to founder Robert Croak. Silly Bandz have generated more than $100 million in annual sales, he says.

The kids can’t get enough. As parents, we use them as incentives to get ours to do what they otherwise find difficult (practicing piano, putting away toys, etc.). Everybody seems reasonably happy with our very local economy. When this fad dies, our currency will crash. Of course, they’ll be another.

Google creeps out Nicholas Carr:

Google is reading my mind—or trying to. Drawing on the terabytes of data it collects on people’s search queries, it predicts, with each letter I type, what I’m most likely to be looking for. …

It felt a little creepy, too. Every time Google presents me with search terms customized to what I’m typing, it reminds me that the company monitors my every move. The privacy risks inherent in such long-distance exchanges became apparent in February, when three European researchers revealed that they had used intercepts of some Google Suggest traffic to reconstruct people’s searches. Alerted to the breach, Google quickly added a new layer of security to the transmissions, but the researchers claim that vulnerabilities remain.

Fair enough and good to know. But one need not use Google. There are alternatives. Vote with your feet (fingers). Carr also writes,

Software programmers are taking the displacement of personal agency to a new level. Relentlessly focused on making their programs more “user friendly,” they’re scripting the intimate processes of intellectual inquiry and even social attachment. We follow their scripts when we click on one of Google’s keyword suggestions, and we follow them when we select from a list of categories to describe ourselves and our relationships on Facebook. These choices are convenient, but they’re not our own. They’re generalizations masquerading as personalizations.

This goes too far. The choices are most certainly our own, beginning with the choice to use a Google product and including the choice to follow one of its suggestions. Is a thesaurus a masquerade too? After all, if I want a synonym for “overreach” and turn to a thesaurus it may suggest “fail,” “go wrong,” and “miscarry.” How convenient. I’ll choose “fail.” Is this a breach of my autonomy?! What if I wanted something more like, “hype.” Maybe I should throw off all the shackles of the oppressive language my culture has chosen for me and make up my own words. “Foobagiberglob!!!” Evil thesaurus!

Look, Google products and a thesaurus are tools. We can fail to understand them. We can fail to use them well. But the failure is ours.

Vacations are coming. I’ve been working like a madman for months so I should take a break. And I will, if not for me then for my family. But I know that there will be moments, possibly even hours, when my mind will turn back to things I’m working on. There will also be moments, possibly even hours, when my time is my own (e.g. middle of the night, everyone else is sleeping, I am not; or, everyone else is reading their novels). For that reason, I’ll be bringing some work-related things on my trips.

The question is how to do this? If I bring my laptop then the temptation to work too much will be great. I’ll want to write. I’ll want to blog. I’ll be distracted by my Google Reader RSS feeds. Plus, every time I open it, for any reason, there could be justified rolling of eyes from family members. The time away from work isn’t just for me. So, no laptop. Not only would it tempt me to do too much it will look like work even if I’m reading a novel in PDF form (it could happen).

Appearances matter. Apparently it can spoil other people’s moods if they think I’m working too much on vacation. My definition of too much and theirs may not be the same. My goal is to keep it confined to moments when my time really is my own and to keep it to reading only (marginal note taking is OK). In truth, I don’t expect to do very much of it. But I want to be prepared just in case. (Sometimes I’m up all night.) If I’m fully distracted by other things and sleeping well I won’t miss not doing any work related reading.

My solution had been (and likely will be) to bring a bunch of paper. When other folks crack open their novels or are otherwise doing their own thing, I can pull out a paper and read it. It almost looks like reading a magazine or a book, though not quite. That is, it just about appears to be vacation behavior even though it is work related. It would be fun for me and borderline acceptable behavior in appearance. Almost perfect!

I just printed what I want to bring and it is a lot of paper. I’m really embarrassed about having printed it all. Normally it would have resided on my laptop, and I’d have saved a tree or two.

Maybe it is time for an e-reader? If one or another of them can accept PDF, PowerPoint, and Word files then it would solve my problem. It would look exactly like I’m reading a novel in electronic form and wouldn’t require the lugging of all that paper.

Whether an e-reader is the solution depends on what it can take as input. I’ve put the question to co-blogger Ian and he wrote me:

It is easy to get PDFs on your iPad and there is an app called iAnnotate that will let you mark them them up like paper. Reading and marking up PDFs is one of the main reasons I got the iPad. Before the iPad came out, I bought a Kindle DX and returned it when I discovered it had no means of annotating PDFs beyond bookmarking. The iPad is really the killer device for going completely paperless.

OK then. I want one. If my family knows I’ll use it to read work-related material instead of novels on vacation, will they buy one for me? What if it has the ability to access the web? Does that make it too much like a laptop for vacation use?

Sometimes less is more.

One doesn’t have to look hard to find ways, big and small, in which our health system is far from the best. I’ve had a few battles with insurers and providers to get them to do their jobs. Aaron Carroll has too. His story is so typical and frustrating. It’s hard to summarize in a brief quote so I’ll just give you the conclusion and encourage you to read the rest (warning: it will piss you off, and it should).

I did nothing wrong.  I follow the rules.  I pay my bills.  I go to my appointments.  I remember to refill on time.  I do everything right.  And I’m absolutely screwed.

Best health care system in the world my ass.

And remember, Carroll is a physician and a researcher who studies our health system. If it fails him, even in a small way, imagine what it’s doing to those less able to “work it.”

My list of minor technology gripes is growing. I’ve done some searching to find solutions and have failed. Anyone who can explain or solve any of the following gets 27 cubic glops of positive Incidental Economist karma shocks, to be delivered at the zero-dimensional mathematical point (not necessarily on this planet) and zero-duration instantaneous time (not necessarily in the future) of your choosing.

It may be important to know that I run the latest version of Firefox with Google Toolbar and iTunes on Windows XP, and I listen to an iPod Nano (either first or second generation; I don’t know how to distinguish). Also, my Google toolbar gripes are consistent across three different computers. Finally, my Google Toolbar gripes are new (a week or two old) and my iPod ones are ancient (been happening for years).

1. Google Toolbar calendar button doesn’t work (clicking on it does nothing). Yes I’ve updated it, which causes it to work for the current Firefox session. It keeps reverting to a useless button. Why?

2. Google Toolbar search box history stays open even after initiating search, i.e. hitting “Enter” (I can close it by clicking elsewhere, but I shouldn’t have to). Yes I’ve read some stuff about this problem online, but nothing helpful. What gives?

3. iPod freezes up, requiring reset (holding down center button + Menu) upon initiating (requesting to play) first podcast after a sync unless I do so immediately after disconnecting USB cable. That is, I can avoid the freeze if after syncing and recharging I start playing a podcast immediately. But if I wait until the next morning to do so, it freezes. ‘Splain that one.

4. Can’t pause a podcast on my iPod within the first ~9 seconds. If I start playing a podcast (e.g. right after syncing–see number 3) and want to pause it right away I can’t. I have to wait about 9 seconds into the podcast. How come?