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Working papers
The Long-run Effect of Air Pollution on Survival Many environmental hazards have long-run health effects, but quasi-experimental studies typically measure outcomes and treatment over short time periods. We develop a new framework for quantifying the effect of air pollution exposure on life expectancy. Using changes in wind direction as an instrument for daily sulfur dioxide levels, we first characterize the dynamic mortality effects of short-run exposure. We then incorporate these estimates into a demographic model to quantify the lifelong effects of a permanent reduction in air pollution exposure. Ninety percent of the survival benefits accrue after the first fifty years of life.
with Tatyana Deryugina
revisions requested from American Economic Review
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NBER Digest
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Health Risk and the Value of Life We develop a stochastic life-cycle framework for valuing health and longevity improvements and apply it to data on mortality, quality of life, and medical spending for adults with different comorbidities. Contrary to conventional theory, we find that sick adults are willing to pay over twice as much per quality-adjusted life-year (QALY) to reduce mortality risk than healthy adults, and that prevention of serious illness risk is worth more per QALY than prevention of mild illness risk. Our results provide a rational explanation for why people oppose a single threshold value for rationing care and why they invest less in prevention than in treatment.
with Daniel Bauer and Darius Lakdawalla
revisions requested from Journal of Public Economics
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Access to Credit Reduces the Value of Insurance We analyze the value of insurance when individuals have access to credit markets. Loans allow consumers to smooth financial shocks over time, decreasing the value of consumption smoothing from insurance. We derive formulas for the value of insurance that can be taken to data, and show how that value depends on individual characteristics and features of loans. We estimate that access to a five-year loan decreases the values of community- and experience-rated insurance for the average beneficiary by $232-$366 (58-61%). Even for the sickest decile, this loan access reduces the value of community-rated insurance by $1,099 (17%).
with Anup Malani and Sonia Jaffe
revisions requested from Journal of Public Economics
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Incentives and Habit Formation in Health Screenings: Evidence from the Illinois Workplace Wellness Study We study habit formation in annual biometric health screenings using a field experiment that randomly assigned financial incentives to 4,799 employees over three years. Completing the first screening raised subsequent screenings by 32.4-36.0 percentage points (84%-90%) annually. Habit formation was similar whether employees were offered screenings as part of a comprehensive wellness program or just screenings alone, suggesting such habits can develop without frequent interactions. We rule out inattention as an explanation, using a subsample assigned more salient incentives. The long-run effect stems from the initial decision to participate, indicating a habit formation process with a one-shot mechanism.
with Damon Jones and David Molitor
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Publications
Teenage Driving, Mortality, and Risky Behaviors We investigate the effect of teenage driving on mortality and risky behaviors in the United States using a regression discontinuity design. We estimate that total mortality rises by 5.84 deaths per 100,000 (15%) at the minimum legal driving age cutoff, driven by an increase in motor vehicle fatalities of 4.92 deaths per 100,000 (44%). We also find that poisoning deaths, which are caused primarily by drug overdoses, rise by 0.31 deaths per 100,000 (29%) at the cutoff and that this effect is concentrated among females. Our findings show that teenage driving contributes to sex differences in risky drug use behaviors.
with Jason Huh
American Economic Review: Insights, December 2021, 3(4): 523-39
Media:
AEA Research Highlight
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Measuring the COVID-19 Mortality Burden in the United States: A Microsimulation Study A full assessment of the COVID-19 pandemic’s mortality burden requires measuring years of life lost (YLLs) and accounting for quality-of-life differences. We use a state-transition microsimulation model to measure YLLs and quality-adjusted life-years (QALYs) lost from the COVID-19 pandemic for the US population ages 25 and over. Our estimates account for the age, sex, and race/ethnicity of decedents, along with: obesity, smoking behavior, lung disease, heart disease, diabetes, cancer, stroke, hypertension, dementia, and nursing home residence. We estimate that the COVID-19 pandemic resulted in 6.62 million QALYs lost (9.08 million YLLs) through March 13, 2021, with 3.6 million (54%) lost by those ages 25-64. The toll on Black and Hispanic communities was the greatest, especially among men 65+, who lost 1,138 and 1,371 QALYs per 10,000. Absent the pandemic, 38% of decedents would have experienced at or above-average life expectancies for their age-sex-race/ethnicity subgroup. Beyond simply excess deaths alone, the COVID-19 pandemic imposed greater life expectancy burden on those 25-64, including those with or at above-average life expectancies, and disproportionate burden on Black and Hispanic communities.
with Hanke Heun-Johnson, Bryan Tysinger, and Darius Lakdawalla
Annals of Internal Medicine, 21 September 2021
Media:
The Hill,
Washington Post,
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Emergency Visits for Thunderstorm-Related Respiratory Illnesses Among Older Adults Thunderstorm-related atmospheric changes are expected to increase in severity with rising global temperatures. Although large-scale evidence is limited, vulnerable populations, such as older adults or those with common chronic respiratory diseases, like asthma or chronic obstructive pulmonary disease (COPD), are expected to be susceptible to negative health effects from these changes. The objective of this study was to determine whether increases in emergency department (ED) visits for acute respiratory illnesses occur among Medicare beneficiaries in the days surrounding thunderstorms across the continental US.
with Eric Zou, Christopher Worsham, Nolan Miller, David Molitor, and Anupam Jena
JAMA Internal Medicine, August 2020, 180(9): 1248-1250
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CNN,
Wall Street Journal,
WebMD,
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Effects of a Workplace Wellness Program on Employee Health, Health Beliefs, and Medical Use: A Randomized Clinical Trial Many employers use workplace wellness programs to improve employee health and reduce medical costs, but randomized evaluations of their efficacy are rare. This randomized clinical trial of 4834 employees of the University of Illinois at Urbana-Champaign was conducted from August 9, 2016, to April 26, 2018. Members of the treatment group (n=3300) received incentives to participate in the workplace wellness program. Members of the control group (n=1534) did not participate in the wellness program. The 2-year workplace wellness program included financial incentives and paid time off for annual on-site biometric screenings, annual health risk assessments, and ongoing wellness activities (eg, physical activity, smoking cessation, and disease management). Measures taken at 12 and 24 months included clinician-collected biometrics (16 outcomes), administrative claims related to medical diagnoses (diabetes, hypertension, and hyperlipidemia) and medical use (office visits, inpatient visits, and emergency department visits), and self-reported health behaviors and health beliefs (14 outcomes). Among the 4834 participants, no significant effects of the program on biometrics, medical diagnoses, or medical use were seen after 12 or 24 months. A significantly higher proportion of employees in the treatment group than in the control group reported having a primary care physician after 24 months. The intervention significantly improved a set of employee health beliefs on average: participant beliefs about their chance of having a body mass index greater than 30, high cholesterol, high blood pressure, and impaired glucose level jointly decreased by 0.07 SDs; however, effects on individual belief measures were not significant.
with David Chan, Damon Jones, Laura Payne, and David Molitor
JAMA Internal Medicine, May 2020, 180(7): 952-960
Media:
Health Affairs,
Inside Higher Ed,
Kaiser Family Foundation,
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The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation We study the dynamics of residential electricity demand by exploiting a natural experiment that produced large and long-lasting price changes in over 250 Illinois communities. Using a flexible difference-in-differences matching approach that accounts for the effect of current, past, and future price changes on current demand, we estimate a one-year price elasticity of -0.16, a two-year elasticity of -0.22, and a long-run elasticity between -0.31 and -0.35. We also provide compelling evidence that consumers increased electricity usage ahead of these announced price changes. Our findings highlight the importance of accounting for consumption dynamics when evaluating energy policy.
with Tatyana Deryugina and Alex MacKay
American Economic Journal: Applied Economics, January 2020, 12(1): 86-114
Media:
Development Impact
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The Mortality and Medical Costs of Air Pollution: Evidence from Changes in Wind Direction We estimate the causal effects of acute fine particulate matter exposure on mortality, health care use, and medical costs among the US elderly using Medicare data. We instrument for air pollution using changes in local wind direction and develop a new approach that uses machine learning to estimate the life-years lost due to pollution exposure. Finally, we characterize treatment effect heterogeneity using both life expectancy and generic machine learning inference. Both approaches find that mortality effects are concentrated in about 25 percent of the elderly population.
with Tatyana Deryugina, Garth Heutel, Nolan Miller, and David Molitor
American Economic Review, December 2019, 109(12): 4178-4219
Winner: 2020 iHEA Arrow Award for Best Paper in Health Economics
Media:
Bloomberg,
Gizmodo,
Medium
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What Do Workplace Wellness Programs Do? Evidence from the Illinois Workplace Wellness Study Workplace wellness programs cover over 50 million US workers and are intended to reduce medical spending, increase productivity, and improve well-being. Yet, limited evidence exists to support these claims. We designed and implemented a comprehensive workplace wellness program for a large employer and randomly assigned program eligibility and financial incentives at the individual level for nearly 5,000 employees. We find strong patterns of selection: during the year prior to the intervention, program participants had lower medical expenditures and healthier behaviors than nonparticipants. The program persistently increased health screening rates, but we do not find significant causal effects of treatment on total medical expenditures, other health behaviors, employee productivity, or self-reported health status after more than two years. Our 95 percent confidence intervals rule out 84 percent of previous estimates on medical spending and absenteeism.
with Damon Jones and David Molitor
Quarterly Journal of Economics, November 2019, 134(4): 1747-1791
Winner: NIHCM Foundation Research Award
Media:
NBER Digest,
New York Times,
Wall Street Journal,
Washington Post,
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A Model of Addiction and Social Interactions Many consumer behaviors are both addictive and social. Understanding how these two phenomena interact informs basic models of human behavior, and matters for policymakers when the behavior is regulated. I develop a new model of demand that incorporates both addiction and social interactions and show that, under certain conditions, social interactions reinforce the effects of addiction. I also show how the dynamics introduced by addiction can solve the pernicious problem of identifying the causal effects of social interactions. I then use the model to illustrate a new and important identification problem for studies of social interactions: existing estimates cannot be used to draw welfare conclusions or even to deduce whether social interactions increase aggregate demand. Finally, I develop a method which allows researchers to distinguish between two common forms of social interactions and draw welfare conclusions.
Economic Inquiry, April 2019, 57(2): 759-773
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Did Medicare Part D Reduce Mortality? We investigate the implementation of Medicare Part D and estimate that this prescription drug benefit program reduced elderly mortality by 2.2 percent annually. This was driven primarily by a reduction in cardiovascular mortality, the leading cause of death for the elderly. There was no effect on deaths due to cancer, a condition whose drug treatments are covered under Medicare Part B. We validate these results by demonstrating that the changes in drug utilization following the implementation of Medicare Part D match the mortality patterns we observe. We calculate that the value of the mortality reduction is equal to $5 billion per year.
with Jason Huh
Journal of Health Economics, May 2017, 53: 17-37
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The Insurance Value of Medical Innovation Economists think of medical innovation as a valuable but risky good, producing health benefits but increasing financial risk for consumers and healthcare payers. This perspective overlooks how innovation can lower physical risks borne by healthy patients facing the prospect of future disease. We present an alternative framework that accounts for all these sources of value and links them to the value of healthcare insurance. We show that any innovation worth buying reduces overall risk and generates positive insurance value on its own. We conduct a stylized numerical exercise to assess the potential empirical significance of our insights. Our calculations suggest that conventional methods meaningfully understate the value of historical health gains and disproportionately undervalue treatments for the most severe illnesses, where physical risk to consumers is the costliest. These calculations also suggest that the value of physical insurance from new technologies may exceed the financial spending risk that they pose.
with Darius Lakdawalla and Anup Malani
Journal of Public Economics, January 2017, 145: 94-102
Policy:
ICER technical brief
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Interpreting Pre-trends as Anticipation: Impact on Estimated Treatment Effects from Tort Reform While conducting empirical work, researchers sometimes observe changes in outcomes before adoption of a new policy. The conventional diagnosis is that treatment is endogenous. This observation is also consistent, however, with anticipation effects that arise naturally out of many theoretical models. This paper illustrates that distinguishing endogeneity from anticipation matters greatly when estimating treatment effects. It provides a framework for comparing different methods for estimating anticipation effects and proposes a new set of instrumental variables to address the problem that subjects' expectations are unobservable. Finally, this paper examines a specific set of tort reforms that was not targeted at physicians but was likely anticipated by them. Interpreting pre-trends as evidence of anticipation increases the estimated effect of these reforms by a factor of two compared to a model that ignores anticipation.
with Anup Malani
Journal of Public Economics, April 2015, 124: 1-17
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Incentives for Reporting Disease Outbreaks Countries face conflicting incentives to report infectious disease outbreaks. Reports of outbreaks can prompt other countries to impose trade and travel restrictions, which has the potential to discourage reporting. However, reports can also bring medical assistance to contain the outbreak, including access to vaccines. We compiled data on reports of meningococcal meningitis from 54 African countries between 1966 and 2002, a period marked by two events: first, a large outbreak reported from many countries in 1987 associated with the Hajj that resulted in more stringent requirements for meningitis vaccination among pilgrims; and second, another large outbreak in Sub-Saharan Africa in 1996 that led to a new international mechanism to supply vaccines to countries reporting a meningitis outbreak. We find that the Hajj vaccination requirements started in 1988 were associated with reduced reporting, especially among countries with relatively fewer cases reported between 1966 and 1979. After the vaccine provision mechanism was in place in 1996, reporting among countries that had previously not reported meningitis outbreaks increased. These results indicate that countries may respond to changing incentives to report outbreaks when they can do so. In the long term, these incentives are likely to be more important than surveillance assistance in prompt reporting of outbreaks.
with Ramanan Laxminarayan and Anup Malani
PLOS One, March 2014, 9(3): e90290
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The Relation Between Variance and Information Rent in Auctions This paper examines the conventional wisdom, expressed in McAfee and McMillan's (1987) widely cited survey paper on auctions, that links increased variance of bidder values to increased information rent. We find that although the conventional wisdom does indeed hold in their (1986) model of a linear contract auction, this relationship is an artifact of that particular model and cannot be generalized. Using Samuelson's (1987) model, which is similar but allows for unobservable costs, we show that increased variance does not always imply increased information rent. Finally, we give the appropriate measure of dispersion (different from variance) that provides the link between the bidder value distribution and information rent.
with Brett Katzman and Jesse Schwartz
International Journal of Industrial Organization, March 2010, 28(2): 127-130
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Book chapters
Geographic and Socioeconomic Heterogeneity in the Benefits of Reducing Air Pollution in the United States Policies aimed at reducing the harmful effects of air pollution exposure typically focus on areas with high levels of pollution. However, if a population’s vulnerability to air pollution is imperfectly correlated with current pollution levels, then this approach to air quality regulation may not efficiently target pollution reduction efforts. We examine the geographic and socioeconomic determinants of vulnerability to dying from acute exposure to fine particulate matter (PM 2.5) pollution. We find that there is substantial local and regional variability in the share of individuals who are vulnerable to pollution both at the county and ZIP code level. Vulnerability tends to be negatively related to health and socioeconomic status. Surprisingly, we find that vulnerability is also negatively related to an area’s average PM 2.5 pollution level, suggesting that basing air quality regulation only on current pollution levels may fail to effectively target regions with the most to gain by reducing exposure.
with Tatyana Deryugina, Nolan Miller, and David Molitor
Environmental and Energy Policy and the Economy, 2021, 157-189. University of Chicago Press
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Health, Body Weight, and Obesity The rise in obesity has generated enormous concern among policy makers and the general public. Economists have focused on explaining the causes of this rise, along with the attendant implications for public policy. This chapter summarizes the economic literature on the theory of weight determination, including the optimal determination of food intake and exercise, and the influence of prices and peer effects. In addition, the chapter reviews the empirical literature that tests a range of explanations for the rise in obesity, such as declining food prices, increasing price of exercise, rising income, peer effects, and the decline in cigarette consumption.
with Darius Lakdawalla
Oxford Handbook of Economics and Human Biology, 2016, 152-178. Oxford University Press
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The Complex Relationship Between Healthcare Reform and Innovation In this chapter we examine some of the interesting and important ways in which healthcare reform, particularly expansion of health insurance, affects innovation. We argue that the complexity and uncertainty of the relationship between insurance and innovation puts a premium on ability to experiment with alternative forms of healthcare reform.
with Darius Lakdawalla and Anup Malani
The Future of Healthcare Reform in the United States, 2015, 289-312. University of Chicago Press
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Other publications
Air Pollution Trends in Illinois This policy spotlight explains how Illinois’ air pollution is monitored, describes trends in air pollution levels, and discusses the potential health consequences. In Illinois, the highest pollution levels are in the Chicago area, though these levels have notably decreased over the past two decades. If recent progress continues, Illinois can expect significant increases in life expectancy and quality of life. However, events such as the 2023 Canadian wildfires underscore that pollution levels in Illinois could be severely disrupted by climate change.
IGPA Policy Spotlight, 27 August 2024
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Geographic differences in the mortality burden of the Covid-19 pandemic This study examines how the mortality burden of the Covid-19 pandemic varied across US states during the time period April 2020 through December 2022. The disparities were substantial, with figures ranging from 318 years of life lost (YLL) per 10,000 population in New York to 1,285 YLL per 10,000 population in New Mexico. Illinois experienced a loss of 588 YLL per 10,000, situating it within the bottom third of states in terms of total loss of life. Overall, Southern and Western states exhibited the highest YLL, while Northeastern states, the upper Midwest, and the Pacific Northwest exhibited the lowest YLL. States that voted for the 2020 Republican presidential candidate experienced greater losses. This loss of life will have multifaceted implications for public finances.
with Hanke Heun-Johnson and Siho Park
IGPA Policy Spotlight, 27 September 2023
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The hidden cost of Covid-19: years of life lost among the young
with Darius Lakdawalla
Stat News, 14 October 2021
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Transparency in an Era of Data-Driven Policy: The Importance of Reproducible Research In this Policy Spotlight, we review the evidence on the reproducibility of published social science research and discuss how to improve the reproducibility of future studies. We also use one of our own published studies to demonstrate how researchers can facilitate reproducibility.
with David Molitor
IGPA Policy Spotlight, 14 October 2021
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Economic Policy in President Biden’s First 100 Days In this article, we discuss six components of President Biden’s economic agenda: his response to the COVID-19 pandemic, domestic spending priorities, climate policy, tax policy, long-term fiscal policy, and immigration policy.
with Nolan Miller
University of Illinois Law Review Online, 30 April 2021
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Air pollution policy should focus on the most vulnerable people, not just the most polluted places Policies aimed at reducing the harmful effects of air pollution on human health typically focus on improving air quality in polluted areas. This column suggests a shift in focus from targeting the most polluted places to serving the most vulnerable people. Basing air quality regulations on pollution levels may be less valuable than reducing air pollution in regions with vulnerable populations. Programmes that reduce poverty or improve access to health care may also lessen the recipients’ susceptibility to acute pollution exposure.
with Tatyana Deryugina, Nolan Miller, and David Molitor
VoxEU, 13 January 2021
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Employee Wellness Programs: Reply
with Damon Jones and David Molitor
JAMA Internal Medicine, 21 December 2020
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The Illinois Workplace Wellness Study: Reply to Dr. Goetzel
with Damon Jones and David Molitor
American Journal of Health Promotion, 24 February 2020
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Workplace Wellness: New Study Finds No Changes in Health Care Costs
with Damon Jones and David Molitor
Scientific American, 19 March 2019
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Tools to Address Illinois Revenue: Increasing Sin Taxes In this report, I estimate the revenue that could be generated by increasing Illinois sin taxes on cigarettes, alcohol, and gambling. I discuss the efficiency and distributional effects of those taxes, as well as potential savings from a reduction in cigarette and alcohol consumption.
State Tax Notes, June 2014, 707-711
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Works in progress
"Peer Effects in the Workplace: Evidence from the Illinois Workplace Wellness Study" (with Alden Cheng, Damon Jones and David Molitor)
"Does Medicare Improve Quality of Life?"
External grants
Investigator, with Hanke Heun-Johnson, Darius Lakdawalla, and Bryan Tysinger
NBER Retirement and Disability Research Center, SSA grant #RDR18000003, Project NB23-02, 10/2022-09/2023
$83,282
Investigator, with Tatyana Deryugina, Nolan Miller, and David Molitor
National Institute on Aging, R01 AG073365, 07/2021-06/2026
$1,633,560
Investigator, with Bill Skimmyhorn and Patrick Turner
$75,000
Investigator, with Tatyana Deryugina, Garth Heutel, Nolan Miller, and David Molitor
National Institute on Aging, R01 AG053350, 07/2016-06/2021
$1,991,498
Principle Investigator, with Damon Jones, David Molitor, and Laura Payne
$2,052,670
Early Career Research Award, with David Molitor
Upjohn Institute, 2017
$5,000