A rational choice theory of midlife crises

This paper models the midlife crisis as a decision on whether and when to realize a life dream, incorporating the key components of three psychology theories of midlife crises. It explains why a crisis (dream realization) tends to occur in the midlife if it occurs at all. Other results include that one either realizes his dream fully or not at all, that a shorter life expectancy makes a midlife crisis more likely, and that “crazier†dreams tend to be postponed to a later time in life.midlife crisis, dream, aging, death

The Rise and Fall of Medicare

The authors propose a means for preserving Medicare as we know it. After detailing the reasons for Medicare\u27s financial troubles, they present a cohort-based financing plan for Medicare that represents a fundamental departure from the generation transfer method currently used.https://research.upjohn.org/up_press/1063/thumbnail.jp

Are We Taming Health Care Spending

EconomicStudies_Analysi

Health Care Spending in the United States: What is Next?

Energy_EnvironmentHealth care spending will always command public policy attention given the prominence of government payers in this market and the role played by the tax system in subsidizing health insurance purchases. But, with President-elect Trump's campaign promise to repeal and replace the Affordable Care Act (ACA), and a Republican House and Senate that have campaigned on the same agenda, the health care insurance market will face another round of reforms. This study examines the past path and possible future paths of health care spending. It also discuss several ways to reform the public insurance programs and to reform the tax treatment of employer provided health insurance. These reforms would constrain the growth in explicit and implicit government spending on health care. Limiting government spending on health care while still replacing the ACA's coverage of the newly insured can be accomplished by a tax reform that reduces tax expenditures on employer sponsored health insurance, by offering risk-adjusted tax credits for the newly insured, by Medicare reforms that include more flexibility, premium support and increased means-testing, and by state-level innovations in the Medicaid program

Discounting Environmental Benefits to Future Generations: Implications of a Coordinating Debt Policy and Tax Distortions in the Capital Market

PoliticalEconomyLooking beyond today’s fiscal problems in the U.S., the debate about the how to best incorporate the well-being of subsequent generations in current public policy discussions continues. Authors Liqun Liu, Andrew J. Rettenmaier, and Thomas R. Saving discuss coordinating the evaluation of long-term environmental projects with debt reduction given that both benefit future generations. This paper establishes a cost-benefit rule used to assess whether long-term projects are Pareto improving with a focus on how the generational benefits and costs should be discounted. This paper goes beyond the existing analysis of intergenerational discounting by exploring the implications of tax distortions in the capital market that drives a wedge between the marginal productivity of capital (the gross rate) and the consumer’s interest rate (the net rate) which have historically been in the range of 7% and 3%, respectively. It concludes that while the lower net rate should be used for future benefits within generations, the higher gross rate is the relevant discount rate for future generations

A Neglected Aspect of Tax Reform: Improving the Efficiency of Tax Expenditures on Employer-Provided Health Insurance

EconomicStudies_Analysis|PublicFinanceThe House recently passed the Tax Cuts and Jobs Act and the Senate now begins debate on its version of tax reform. Debate has centered on the tax reform's potential negative revenue effects and its disparate treatment of taxpayers with different income levels. Likewise, the American Health Care Act of 2017 was not able to find a balance between containing the growth in government health care spending and maintaining the share of the population that is covered by health insurance. A neglected aspect of both of these acts is the tax exclusion of employer-provided health insurance (EPHI). This study demonstrates that a reform of the tax expenditures on EPHI that replaces the tax exclusion with a system of tax credits can increase tax revenues, as well as restore equal treatment between high-earning and low-earning employees. This study estimates indicate that such a reform of EPHI could potentially reduce the cumulative federal deficit over the 2018-2027 period by $809 billion. These revenue gains from the EPHI reform are even more significant if one considers that they are achieved when the new tax credit system retains the incentive to buy health insurance coverage and to form employment-based insurance pools

A Primer on Measures of Government Financing Shortfalls and Liabilities

EducationThis note presents measures of financing shortfalls and liabilities, both for an individual government program such as Social Security and for government financing as a whole. At the level of individual programs, the widely accepted measure of financing shortfall is the (infinite horizon) unfunded obligation, which is the present value of scheduled future benefits less the present value of the dedicated future tax revenues. At the aggregate level, a measure of financing shortfall is the fiscal imbalance, which is the total unfunded obligation of all government programs plus the debt held by the public. At the aggregate level, there is also a relative measure of financing shortfall, the fiscal gap. It is basically the fiscal imbalance divided by the present value of all of the future GDP. At both the individual and the aggregate level, a portion of the corresponding financing shortfall measure is due to past actions, and the rest is contingent on the continuation of the current policies in the future. The portion of the financing shortfall measure that is due to past actions provides a measure of liabilities for an individual program or the government financing as a whole

Federal Entitlement Spending

EducationFederal spending has hovered at around 20% of GDP for the past 50 years. Recent CBO reports forecast deficits averaging around 5% of GDP each year for the next 10 years, combined with rising federal spending continue to raise the federal debt to unprecedented peacetime levels. Today, Social Security, Medicare and Medicaid are the three main transfer programs – accounting for almost 50% of all federal government outlays. In PERC Policy Study 1801, authors Liqun Liu, Andrew J. Rettenmaier and Thomas R. Saving compare federal spending over time, discuss the causes behind the rise in spending, and focus on transfer program reforms. The paper provides workable alternatives that constrain spending by adjusting the full retirement age and benefit formula of Social Security and Medicare, and also redefining the basis by which each state receives federal Medicaid contributions

Risk and Risk Aversion Effects in Contests with Contingent Payments

PublicFinanceContests by their very nature involve risk, winning and losing are both possible, and the gain from winning can itself be uncertain. The participants in a contest use resources to increase their chance of winning. The main focus of this analysis is on the effects of risk aversion and risk in contests where only winners pay for resources used to compete. When payment is contingent on winning, the effect of risk aversion is in the opposite direction of what occurs when costs are paid by both winners and losers. A number of contests observed in the marketplace that exhibit this contingent payment property are discussed