Health and the welfare of U.S. business

Business leaders continue to blame the skyrocketing cost of health care for jeopardizing the global competitiveness of U.S. industries, and they continue to turn to Washington for the solution. Yet after a study of 16 countries, Wharton researchers David Brailer and R. Lawrence Van Horn have discovered that health care costs do not directly hinder U.S. competitiveness. Their conclusion: there is indeed a health care crisis in the United States as well as a competitiveness crisis. But the two are unrelated, and confusing them makes it difficult to solve either one. The real problem, according to the authors, is the hands-off approach that employers typically adopt when it comes to health care. No matter how Washington responds to the health care crisis, employers must explore their own role in ensuring the health of their work force. And they must realize that their role can be a strategic one. Instead of containing costs by fine-tuning benefits packages, companies can control costs and improve health care delivery by treating health care like any other crucial component of production. Brailer and Van Horn propose three strategies for managing health care delivery: First, companies must intervene in the supply side of the health care market. This may mean creating a clinic alone or with other companies, or joining with other companies to procure health care. Second, companies need to translate corporate health benefits into the most cost-effective set of services at the local level. Finally, companies must encourage and educate employees to participate in decisions regarding health care delivery.(ABSTRACT TRUNCATED AT 250 WORDS)     

Optimal Policy with Tradable and Bankable Pollution Permits: Taking the Market Microstructure into Account

This paper analyzes how the way emission permits are traded—their market microstructure—affects the optimal policy to be adopted by the environmental agency. The microstructure used is one of a quote driven market type, which characterizes many financial markets. Market makers act as intermediaries for trading the permits by setting an ask price and a bid price. The possibility of bank permits is also introduced in our dynamic two‐period model. We consider two models whether the market makers are perfectly informed about the technology of the producers or not. When the market makers have complete information, the equilibrium price of permits is the same as if the market is walrasian. When they are imperfectly informed, they may set a positive spread between bid and ask permit prices, which creates some inefficiency as the marginal abatement costs of polluters do not equalize. By allowing more flexibility in the use of the permits, banking may reduce the spread. Moreover, it may introduce price rigidities due to intertemporal arbitrage. In this framework, the circumstances under which banking should be allowed or not depend crucially on the evolution of the marginal willingness to pay for the environment.     

An Application of Rating Conjoint Analysis to Study the Importance of Quality-, Access- and Price-attributes to Health Care Consumers

Outside the health care sector, consumer preferences have been effectively studied using rating and ranking conjoint techniques. In the health care sector this technique has received less attention than its choice-based variant. Applications of rating and ranking method to health care issues are few. This paper presents an application of rating conjoint analysis to study the importance of quality, access and price to the health care consumers in Bulgaria. The paper first describes the rating conjoint method and its distinctive features compared to the choice-based and the ranking approach. The method is illustrated by the rating conjoint design applied in the study. Next, the impact of different quality-, access- and price-levels on the rating of physician profiles is analysed and the differences between the socio-demographic groups are examined. The results suggest that similar to other countries, the quality of care is a highly valued characteristic in Bulgaria, whereas access is perceived as less important. The considerable importance of patient payments further implies that Bulgarians are responsive to prices in the health care sector, especially the elderly, the village dwellers and the lowest income groups. The relevance of the results with regards to health policy and planning, as well as with regards to the methodology of rating conjoint analysis is discussed at the end of the paper.     

On the static and dynamic costs of trade restrictions for small developing countries

We analyze the costs of trade restrictions for a small developing economy (LDC). Intermediate goods invented elsewhere are only introduced on the LDC market if it is profitable to do so. The LDC economy evolves to a balanced growth path in which income, welfare, and the share of available goods increase if trade restrictions fall. The adjustment path is asymmetric: an increase in trade restrictions leads to a slow-down of economic growth, while a decrease may lead to a rapid catch-up process. The dynamic costs of trade restrictions are in general substantially larger than the static costs.     

Explicit tests of contingent claims models of mortgage default

This paper provides explicit and powerful tests of contingent claims approaches to modeling mortgage default. We investigate a model of frictionless default (i.e., one in which transactions costs, reputation costs, and moving costs play no role) and analyze its implications-the relationship between equity and default, the timing of default, its dependence upon initial conditions, and the severity of losses. Absent transactions costs and other market imperfections, economic theory makes well-defined predictions about these various outcomes.The empirical analysis is based upon two particularly rich bodies of micro data: one indicating the default and loss experience of all mortgages purchased by the Federal Home Mortgage Corporation (Freddie Mac), and a large sample of all repeat sales of single family houses whose mortgages were purchased by Freddie Mac since 1976.     

Momentum and House Price Growth in the United States: Anatomy of a Bubble

This article analyzes the bubble in property values across cities in the United States from 1999 through 2005. We find evidence of momentum in house price growth (relative to growth in rents) away from the underlying fundamentals throughout the 1980–2005 period; however, momentum increased after 1999. We find that the bubble happened mostly after 2003; it was for a relatively short period and was characterized by a series of positive, seemingly random, shocks that were associated with the surge in the subprime market and the decline in short‐term interest rates. Before that price changes were reasonably well explained by the fundamentals, particularly the decline in long‐term interest rates in the early part of the bubble period. We do not find evidence of a tendency for prices relative to rents to revert to a long‐run trend.     

Gathering Information and Exercising Influence: Two Forms of Civic Virtue Organizational Citizenship Behavior

Political behavior at work often is disparaged as self-serving activity that undermines the efficient pursuit of organizational goals. Yet politics has a more benign meaning as well: responsible participation in decision-making processes, keeping informed, and promoting innovative ideas that serve long-term organizational interests. To date, the negative image of organizational politics among managers and scholars has limited research on the positive contributions of responsible political participation, a form of Organizational Citizenship Behavior (OCB) known as civic virtue.This paper draws on political philosophy and organizational research to consider two forms of civic virtue OCB: gathering information and exercising influence. Both are proactive and can have beneficial results for individuals, organizations, and society. Conceptually, the two forms of civic virtue are related. Yet they also are different. Results of a field study of 245 employees and their supervisors provide support for similarities and differences in the two forms of civic virtue. We discuss theoretical and practical implications of our study, and the benefits of continued research on both aspects of civic virtue OCB.An earlier version of this paper was presented at the Society for Industrial and Organizational Psychology, Orlando FL, April 2003, in a symposium entitled “New Perspectives on the Dimensionality of Organizational Citizenship Behavior.” A newer version of this paper was presented at the October 2005 International Meeting of the Association on Employment Practices and Principles (AEPP) in Baltimore, MD.