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Department of  Economics

Research:

      Publications

• Alcohol and Environmental Justice:  The Density of Liquor Stores and Bars in Urban Neighborhoods in the United States, with Deborah Cohen, Jeanne Ringel, and Roland Sturm, Journal of Studies on Alcohol and Drugs, 2007, 68(1):  48-55. [Link]
   

      Working Papers

• How Costly Is Hospital Quality?  A Revealed-Preference Approach, with Dana Goldman, NBER Working Paper 13730, submitted (January, 2008)
  
  Abstract.  One of the most important and vexing issues in health care concerns the cost to improve quality.  Unfortunately, quality is difficult to measure and potentially confounded with productivity.  Rather than relying on clinical or process measures, we infer quality at hospitals in greater Los Angeles from the revealed preference of pneumonia patients.  We then decompose the joint contribution of quality and unobserved productivity to hospital costs, relying on heterogeneous tastes among patients for plausibly exogenous quality variation.  We find that more productive hospitals provide higher quality, demonstrating that the cost of quality improvement is substantially understated by methods that do not take into account productivity differences.  After accounting for these differences, we find that a quality improvement from the 25th percentile to the 75th percentile would increase costs at the average hospital by nearly fifty percent.  Improvements in traditional metrics of hospital quality such as risk-adjusted mortality are more modest, indicating that other factors such as amenities are an important driver of both hospital costs and patient choices.  [Paper] 
  
   
• Accounting for Limited Liability among Law Firms, with Eric Talley, submitted (September, 2007)
   

  Abstract.  Almost all states introduced limited-liability business forms for law firms during the 1990s.  We consider alternative accounts, based on entrepreneurship, intra-firm monitoring, and the strategic extraction of rents from clients, of limited liability in the legal-services industry.  In particular, we argue that moral hazard due to unobservable effort, together with risk / revenue sharing among a firm's owners, can present a provider of professional services with an opportunity to draw more generous compensation from clients.  We test each account's empirical predictions with a new data set on American law firms in 1993 and 1999.  The likelihood of organizing under a new limited liability business form increased monotonically with firm size, especially among incumbents firms.  This evidence is consistent with rent extraction but inconsistent with entrepreneurship.  Monitoring played a modest role.  [Paper] [Technical appendix]
    
   

• Hospital Ownership and the Response to a Quality Incentive, with Steven Garber, submitted (February, 2007)
  
  Abstract.  Payers are increasingly providing hospitals and other providers with financial incentives for increasing quality.  We analyze the response of non-profit and for-profit hospitals to the introduction of a quality incentive.  In our model, a non-profit hospital is altruistic, and quality is rewarded with higher reimbursement.  The relationship between a hospital’s ownership and its response to the quality incentive depends on its degree of altruism, the design of the incentive, and the responsiveness of demand to quality.  In particular, we show that when a quality incentive is introduced a non-profit hospital may increase its quality either more or less than a for-profit hospital does, and we analyze the determinants of their relative responses.  [Paper]
  
   
• Efficiency and Its Measurement, with Peter Hussey, Han de Vries, Margaret Wang, Paul Shekelle, and Elizabeth McGlynn, submitted (September, 2007)
  
   
• A Systematic Review of Health Care Quality Measures, with Peter Hussey (first author), Han de Vries, Margaret Wang, Susan Chen, Paul Shekelle, and Elizabeth McGlynn, submitted (August, 2007)
  
   
• Does Liability Affect Small Business?, with Bogdan Savych and Eric Talley, DRR-4042-ICJ, RAND Corporation (August, 2006) 
   

      Technical Reports

• Assessing the Performance of Military Treatment Facilities:  A Preliminary Examination of Variability in Utilization and Costs, with Nancy Nicosia (first author), Susan Hosek and Barbara Wynn, PM-2296-OSD, RAND Corporation, 2007
   
  

• Mail Order and Pharmacy Costs in the Military Health System, DRR-4028-OSD, RAND Corporation, 2006
  
   
• The Quality of Personnel in the Enlisted Ranks, with Beth Asch (first author) and Mark Totten, MG-324-OSD, RAND Corporation, 2005  [Report]
   

Last modified: 04 February, 2008