Giffen Behavior: Theory and Evidence

This paper provides the first real-world evidence of Giffen behavior, i.e., upward sloping demand. Subsidizing the prices of dietary staples for extremely poor households in two provinces of China, we find strong evidence of Giffen behavior for rice in Hunan, and weaker evidence for wheat in Gansu. The data provide new insight into the consumption behavior of the poor, who act as though maximizing utility subject to subsistence concerns, with both demand and calorie elasticities depending significantly, and non-linearly, on the severity of their poverty. Understanding this heterogeneity is important for the effective design of welfare programs for the poor.

Provider Choice of Quality and Surplus

We study the quality choices of institutional health-care providers, such as hospitals, assuming that the utility function of the key organizational decision-maker includes both quality of care and financial surplus. An increase in the decision-maker’s rate of surplus retention leads to a decrease (increase) in quality if his coefficient of relative risk aversion is less than (greater than) 1, as is likely when the decision-maker faces prosperous (difficult) financial conditions. Such behavior is consistent with "target income behavior," where the target income is surplus sufficient to break even. An increase in productive efficiency always leads the provider to increase quality.

The Effects of Environmental Regulation on Technology Diffusion: The Case of Chlorine Manufacturing

We use a hazard model to estimate the effect of environmental regulation on the diffusion of membrane cell production technology in the chlorine manufacturing industry. We estimate the effect of regulation on both the adoption of the membrane technology at existing plants and on the exit of existing plants using older technologies. We find that environmental regulation did affect the diffusion of the cleaner technology in the chlorine industry. However, it did so not by encouraging the adoption of membrane cells by existing facilities, but by reducing the demand for chlorine and hence encouraging the shutdown of facilities using the environmentally inferior options.Regulation, Technological change, Environment, Hazard model

The Effects of Environmental Regulation On Technology Diffusion: The Case of Chlorine Manufacturing

We use a hazard model to estimate the effect of environmental regulation on the diffusion of membrane cell production technology in the chlorine manufacturing industry. We estimate the effect of regulation on both the adoption of the membrane technology at existing plants and on the exit of existing plants using older technologies. We find that environmental regulation did affect the diffusion of the cleaner technology in the chlorine industry. However, it did so not by encouraging the adoption of membrane cells by existing facilities, but by reducing the demand for chlorine and hence encouraging the shutdown of facilities using the environmentally inferior options.regulation, technological change, environment, hazard model

The Impact of Air Temperature on Mortality, Morbidity, and Healthcare Cost in the Medicare Population

Abstract: This paper merges weekly average temperature data from the National Oceanic Atmospheric Administration’s National Climatic Data Center (NDCC) with Medicare claims data in order to analyze the impact of high and low temperatures on mortality, onset of new chronic conditions, and hospital spending. We find a U-shaped pattern to mortality, with high and low temperature weeks exhibiting higher mortality than a 70 degree reference week. The marginal deaths in extreme weeks are healthier than the typical person who dies in the reference week, but less healthy than the population as a whole. We find some evidence of short-term mortality displacement at moderately high temperatures, but not at extremely high temperatures and not for low temperatures, where the impact tends to grow over time. High temperatures are associated with increased onset of new chronic conditions, while low temperatures are associated with lower onset, although this result may be driven by differences in the propensity to access the health care system. In the short run, high temperatures are associated with increased Medicare hospital spending and lower temperatures are associated with decreased hospital spending, although over a one month period both high- and low-temperature weeks are associated with increased hospital spending. Using conventional figures for the value of a life year lost, we find the additional healthcare spending induced by a hot week to be about 3-6% of the mortality cost

Solomonic Separation: Risk Decisions as Productivity Indicators

A principal provides budgets to agents (e.g., divisions of a firm or the principal's children) whose expenditures provide her benefits, either materially or because of altruism. Only agents know their potential to generate benefits. We prove that if the more "productive" agents are also more risk-tolerant (as holds in the sample of individuals we surveyed), the principal can screen agents and bolster target efficiency by offering a choice between a nonrandom budget and a two-outcome risky budget. When, at very low allocations, the ratio of the more risk-averse type's marginal utility to that of the other type is unbounded above (e.g., as with CRRA), the first-best is approached. A biblical opening enlivens the analysis

Applications of chiral perturbation theory to lattice quantum chromodynamics

In this dissertation, we calculate hadronic observables through the application of chiral perturbation theory to lattice quantum chromodynamics. Quantum chromodynamics is the quantum field theory for the strong interaction which, in the low-energy regime, becomes non-perturbative. The lattice acts as a regulator for the theory and allows us to make predictions at low-energy even without a perturbative expansion. However, since these lattice calculations require non-zero lattice spacing and often assume light quark masses much greater than those provided by Nature, calculating observables requires us to extrapolate the results from multiple lattice ensembles to the physical, continuum limit. We perform these extrapolations using chiral perturbation theory, an effective field theory for quantum chromodynamics in which the degrees of freedom are the pseudo-Goldstone bosons emerging from the explicit, spontaneous breaking of chiral symmetry. We concentrate particularly on determining the gradient flow scales $w_0$ and $t_0$, which allow us to set the scale of our lattice; the ratio of the pseudoscalar decay constants $F_K/F_\pi$, from which we determine the ratio of the Cabibbo-Kobayashi-Maskawa matrix elements $|V_{us}|/|V_{ud}|$; the masses of the cascades, as a precursor to a lattice determination of the hyperon transition matrix elements; and finally the nucleon sigma term, which has implications for the cross section of the neutralino in the minimal supersymmetric Standard Model.Doctor of Philosoph

A Revealed Preference Approach to Measuring Hunger and Undernutrition

Caloric intake and minimum calorie thresholds are widely used in developing countries to assess hunger and nutrition, and to construct poverty lines. However, it is generally recognized that the sufficiency of an individual's caloric intake cannot be determined, due to: a lack of consensus on the true thresholds; the fact that any such thresholds are individual-varying and unobservable; imperfect nutrient absorption; and the weak and non-monotonic empirical relationship between calories and wealth. We propose a revealed preference approach to measuring hunger and undernutrition that overcomes these challenges. Low caloric intake is associated with a large utility penalty (e.g., physical discomfort). The corresponding high marginal utility of calories causes a utility-maximizing consumer to primarily consume the cheapest available source of calories (a staple). Once they have surpassed subsistence, the marginal utility of calories declines significantly and they substitute towards foods with higher levels of non-nutritional attributes (e.g., taste). Thus, though any individual's requirements are unobserved, their choice to switch away from the staple reveals they are above that requirement. Accordingly, the percent of calories obtained from the staple can be used to indicate nutritional sufficiency. We also provide an application for China that shows the desirable empirical properties of this approach.

Do Consumer Price Subsidies Really Improve Nutrition?

Many developing countries use food-price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods on which households spend a high proportion of their budget can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes (e.g., taste), but lower nutritional content per unit of currency, weakening or perhaps even reversing the intended impact of the subsidy. We analyze data from a randomized program of large price subsidies for poor households in two provinces of China and find no evidence that the subsidies improved nutrition. In fact, it may have had a negative impact for some households.

What Does Health Reform Mean for the Healthcare Industry? Evidence from the Massachusetts Special Senate Election

The recent reform of the U.S. health care system has been described both as a boon and a death blow for the healthcare industry and for private insurers in particular. We exploit the surprise election of Republican Scott Brown to the U.S. Senate, which dealt a serious blow to the prospects for reform by depriving Democrats of their 60-vote “filibuster-proof” majority, to evaluate the market's assessment of Health Reform’s impact on the health care industry. We find that Scott Brown’s election was associated with an abnormal return of 2.2 percent for a typical dollar invested in health care stocks and an abnormal return of 6.3 percent for a typical dollar invested in managed care firms. A typical dollar invested in the pharmaceutical sector experienced abnormal returns of 2.9 percent, while investments in healthcare facilities (including hospitals) experienced abnormal losses of 3.4 percent. Analysis of firms participating in government programs show that firms involved with Medicare Advantage experienced gains while those involved with Medicaid Managed Care experienced losses due to the election.