The Health Care Consequences of Smoking and its Regulation

The literature on the health economics of smoking presents two principal facts: that smoking increases health care costs, and that restrictions on smoking lead to reductions in smoking prevalence and intensity. Some researchers have hypothesized that these two facts, in combination, allow the inference that restricting smoking will lower health care costs. For a variety of reasons, however, observed associations between smoking and health care use on the one hand, and regulations and smoking on the other, do not imply a casual effect of the restrictions on health care. This paper extends the literature by examining whether cigarette tax increases lead to lower health care costs. Using data from the 1991 and 1993 National Heath Interview Surveys, it first reproduces the principal results in the literature on smoking, taxes, and health care utilization, and then estimates the effects of tobacco taxes on health care. The results indicate that once one controls for endogenous quits, the health care benefits of smoking cessation are greater than previously believed. There is weak evidence that tax increases lead to higher cessation rates. In combination, these results suggest that, in addition providing a source for funding excess health care costs, tax increases may lower health care costs (for given longevity) directly by inducing smokers to quit.

Optimal Estimation of Several Linear Parameters in the Presence of Lorentzian Thermal Noise

In a previous article we developed an approach to the optimal (minimum variance, unbiased) statistical estimation technique for the equilibrium displacement of a damped, harmonic oscillator in the presence of thermal noise. Here, we expand that work to include the optimal estimation of several linear parameters from a continuous time series. We show that working in the basis of the thermal driving force both simplifies the calculations and provides additional insight to why various approximate (not optimal) estimation techniques perform as they do. To illustrate this point, we compare the variance in the optimal estimator that we derive for thermal noise with those of two approximate methods which, like the optimal estimator, suppress the contribution to the variance that would come from the irrelevant, resonant motion of the oscillator. We discuss how these methods fare when the dominant noise process is either white displacement noise or noise with power spectral density that is inversely proportional to the frequency ($1/f$ noise). We also construct, in the basis of the driving force, an estimator that performs well for a mixture of white noise and thermal noise. To find the optimal multi-parameter estimators for thermal noise, we derive and illustrate a generalization of traditional matrix methods for parameter estimation that can accommodate continuous data. We discuss how this approach may help refine the design of experiments as they allow an exact, quantitative comparison of the precision of estimated parameters under various data acquisition and data analysis strategies.Comment: 16 pages, 10 figures. Accepted for publication in Classical and Quantum Gravit

THE PROFITABILITY OF AGRICULTURAL CUSTOMERS FOR COMMERCIAL BANKS IN THE SOUTHEAST

Agricultural Finance,

"Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare

We analyze the effects on consumers of an extreme policy experiment -- Napsterizing' pharmaceuticals -- whereby all patent rights on branded prescription drugs are eliminated for both existing and future prescription drugs without compensation to the patent holders. The question of whether this policy maximizes consumer welfare cannot be resolved on an a priori basis due to an obvious tradeoff: While accelerating generic entry will yield substantial gains in consumer surplus associated with greater access to the current stock of pharmaceuticals, future consumers will be harmed by reducing the flow of new pharmaceuticals to the market. Our estimates of the consumer surpluses at stake are based on the stylized facts concerning how generic entry has affected prices, outputs, and market shares. We find that providing greater access to the current stock of prescription drugs yields large benefits to existing consumers. However, realizing those benefits has a substantially greater cost in terms of lost consumer benefits from reductions in the flow of new drugs. Specifically, the model yields the result that for every dollar in consumer benefit realized from providing greater access to the current stock, future consumers would be harmed at a rate of three dollars in present value terms from reduced future innovation. We obtain this result even accounting for the stylized fact that after generic entry branded drugs continue to earn significant price premia over generic products and hence recognizing that Napsterizing does not completely eliminate the incentives to innovate.

Workers\u27 Compensation: Wage Effects, Benefit Inadequacies, and the Value of Health Losses

Using the 1977 Quality of Employment Survey in conjunction with BLS risk series and state workers\u27 compensation benefit formulas, the authors assess the labor market implications of workers\u27 compensation. Higher levels of workers\u27 compensation benefits reduce wage levels, and controlling for workers\u27 compensation raises estimates of compensating differentials for risk. The rate of trade-off between wages and workers\u27 compensation suggests that benefit levels provide suboptimal levels of income insurance, abstracting from moral hazard considerations. The value of non-monetary losses from job injuries (including pain and suffering and non-work disability) is estimated to be $17,000-$26,000