What did Medicare do? The initial impact of Medicare on mortality and out of pocket medical spending

We study the impact of the introduction of one of the major pillars of the social insurance system in the United States: the introduction of Medicare in 1965. Our results suggest that, in its first 10 years, the establishment of universal health insurance for the elderly had no discernible impact on elderly mortality. However, we find a substantial reduction in the elderly's exposure to out of pocket medical expenditure risk. Specifically, we estimate that the introduction of Medicare was associated with a 40% decline in out of pocket spending for the top quartile of the out of pocket spending distribution. A stylized expected utility framework suggests that the welfare gains from such reductions in risk exposure alone may be sufficient to cover almost two-fifths of the costs of Medicare. These findings underscore the importance of considering the direct insurance benefits from public health insurance programs, in addition to any indirect benefits from an effect on health.     

Assessing advertising content in a hospital advertising campaign: An application of Puto and Wells (1984) measure of informational and transformational advertising content

The following is a report of a study designed to measure advertising content based on the cognitive and affective elements of informational (i.e., information processing) and transformational (i.e., experiential) content using the measure of advertising informational and transformational content developed by Puto and Wells (1984). A university hospital advertising campaign designed to be high in transformational content did not appear to affect perceived quality of local university hospitals relative to private hospitals or increase the likelihood of choosing a university hospital in the future. Further, experiences with university hospitals that seemed to be in direct contrast to the content of the advertisements based on subject perceptions affected how university hospital advertisements were perceived in terms of content. Conclusions and implications for hospital advertising campaigns are discussed.     

VALUING REDUCED RISKS TO CHILDREN: THE CASE OF BICYCLE SAFETY HELMETS

The protection of children's health has recently become a mandated priority for federal policy makers. To assess many of the regulations that affect children's health, policy makers need estimates of the monetary value of reducing mortality risks to children. Although the economics literature has provided many estimates of the value of statistical life (VSL) for adult populations, it has provided none for school age children. This article studies the market for bicycle safety helmets and estimates for the first time a separate but comparable VSL for children and adults. We derive three estimates of VSL for each of three age categories (5 to 9, 10 to 14, and 20 to 59) that range from $1.1 to $4.0 million. In all cases, estimates for adults are highest, followed by estimates for the youngest children.     

Inter-Governmental Fiscal Relations: The Facilitator of Fiscal Decentralization

The decentralization of fiscal authority to lower level jurisdictions contributes to the efficient delivery of public services, but conflicts with national objectives. This paper argues that the system of fiscal relations, including both the grant structure and institutions for policy coordination, are necessary for achieving the full benefits of fiscal decentralization while preserving national efficiency and equity objectives. The case for decentralization is recounted, along with the ways it can impinge upon efficiency and equity in the national economy. These adverse effects can be mitigated by appropriate fiscal transfers, both equalizing and conditional, and suitable measures of policy harmonization.     

Spatial Autoregression Techniques for Real Estate Data

This paper describes how spatial techniques can be used to improve the accuracy of market value estimates obtained using multiple regression analysis. Rather than eliminating the problem of spatial residual dependencies through the inclusion of many independent variables, spatial statistical methods typically keep fewer independent variables and augment these with a simple model of the spatial error dependence. We discuss alternative spatial autoregression model specifications, estimation methods, and prediction procedures. An empirical example is provided in the appendix.     

The language of US corporate environmental disclosure

We rely on prior work in environmental disclosure and corporate impression management to investigate whether there are self-serving biases present in the language and verbal tone used in corporations’ environmental disclosures. Specifically, we argue that the degree of bias in these narratives varies systematically based on firm environmental performance, hypothesizing that disclosures of worse environmental performers exhibit significantly more “optimism” and less “certainty” than their better-performing counterparts. We test our two hypotheses using a cross-sectional sample of corporate environmental disclosures contained in US 10-K annual reports. Utilizing the content analysis software DICTION to determine “optimism” and “certainty” scores for the disclosures, we find empirical support for both hypotheses. Our study contributes significantly to research in environmental disclosure by investigating bias in the use of language and verbal tone as a tool for managing stakeholder impressions and by finding empirical support for this role. Thus, the language and verbal tone used in corporate environmental disclosures, in addition to their amount and thematic content, should be considered when investigating the relation between corporate disclosure and performance.     

Trading volume and firm-specific announcements: Implications for the market model

The market model is commonly used in finance to study events and to evaluate security performance. With daily data, it is not uncommon to find low R-squares, in the range 0–10%. Prior studies have attempted to improve the fit of the model by excluding observations associated with high trading volume. In this study, we compare the results of the high-volume-exclusion approach with the more direct firm-specific announcement exclusion approach. The announcement approach excludes observations associated with Wall Street Journal Index news items regarding the firm. By excluding the [−1,0] fays relative to such news in a sample of 68 firms, we find that R-squares increase significantly by about 5%. By excluding the days relative to earnings announcements only, R-squares increase by about 4%. These results are then compared to the high-volume-exclusion approach. It is found that this approach is more efficient as an 8% increase in R-squares is produced.The results of this study provide valuable evidence to empiricists by comparing the two approaches to improving the fit of the market model. The high-volume -exclusion approach provides higher R-squares. However, the relative efficiency of the two approaches should be balanced against the arguments for the methodologically correct approach. The advantage of using the firm-specific announcement exclusion approach is that there is more confidence of excluding only firm-specific movements from the estimation of the market model. It also allows a researcher to quickly and unambiguously identify the announcements and delete the corresponding observations. Furthermore, we find that about 50% of the improved fit, relative to the volume approach, can be accomplished by excluding earnings announcements. The methodological disadvantage of using the high-volume-exclusion approach is that it is affected not only by firm-specific announcements but also by other factors, such as the heterogeneity of investor expectations. These factors may influence the choice of using firm-specific announcements rather than the high-volume approach despite the lower increment in R-squares.     

Multivariate models of hotel occupancy performance and their implications for hotel marketing

Multivariate models are developed to explain the differential occupancy performance of a sample of 279 English hotels. Following a procedure established in an earlier paper, hotels are first differentiated on the basis of their overall occupancy performance, seasonality, long‐term trend and length of season. Regression models are specified and calibrated to relate each of these dimensions of occupancy performance to the location and other characteristics of the hotels. The four models produce the expected positions of hotels in ‘occupancy performance space’, against which their observed positions can be compared. The application of the models in hotel marketing is discussed and demonstrated. Copyright © 2001 John Wiley & Sons, Ltd.     

Hours risk and wage risk: repercussions over the life cycle*

We decompose earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks, we formulate a life-cycle model of consumption and labor supply. For estimation, we use data on married American men from the Panel Study of Income Dynamics. Permanent wage shocks explain 31 percent of total risk, permanent hours shocks 21 percent. Progressive taxation attenuates cross-sectional earnings risk, but its life-cycle insurance impact is much smaller. At the mean, a one-standard-deviation hours shock raises lifetime income by 11 percent, a wage shock by 13 percent.