28 Jun 2008
Are Airline Loyalty Programs About to Die?
Delta (and others?) to start charging for award tickets
by Richard Belzer
in Regulatory Economics
Delta Airlines has announced new fees for redeeming frequent flyer miles into airline tickets -- $25 for domestic flights and $50 for international destinations. Other airlines are considering reciprocal actions.
What does economics teach about the likely consequences of this action? More...
1 Jun 2008
Breaking Even is Hard to Do:
The higher cost of hybrid vehicles
by Richard Belzer
in Regulatory Economics
New York Times reporter Bill Vlasic says "[c]onsumers have been slow to embrace" General Motors' new Yukon/Tahoe Hybrid despite the near 50% improvement in city driving fuel efficiency. It's easy to see why. More...
30 May 2008
Economic Incentives that Work:
How to stop 'flopping'
by Richard Belzer
in Amusements, Regulatory Economics
The Washington Post's Ivan Carter writes that the NBA has decided to fine players who 'flop'. Will it work? More...
27 May 2008
More Evidence that Consumers Respond to Gas Prices
Increases observed in mass transit use
by Richard Belzer
in Regulatory Economics
During the short-lived debate about suspending the federal gas tax to ease prices, economists quoted in the news seemed to agree that consumer demand is highly inelastic -- that is, as price increases a lot, the quantity demanded changes very little.
The news increasingly contains stories suggesting that consumers respond more to changes in the price of gasoline than economists have assumed is the case. Example: rising use of mass transit. More...
2 May 2008
Gas Tax Holidays...
...and how they conflict with the candidates' energy policy proposals
by Richard Belzer
in Regulatory Economics
Recently, Sens. John McCain (R-AZ) and Hillary Clinton (D-NY) have proposed a "gas tax holiday" in which the federal government would suspend its collection of motor fuel taxes during the summer vacation travel season. Sen. Barack Obama (D-IL) has opposed it because it would provide minimal relief.
The proposed gas tax holiday is an odd idea to dominate an energy policy debate. All three candidates have promised to take action if elected that would dramatically and permanently increase gasoline prices. More...
19 Feb 2008
The Precautionary Principle in Action:
Is taking or not taking Vytorin 'precautionary'?
by Richard Belzer
in Regulatory Policy, Regulatory Science
A recent study raised doubt about the benefits of Vytorin, a patented combination of two anti-cholesterol drugs, ezetimibe and simvastatin. Some cardiologists say the study is sufficient evidence to stop prescribing it as widely; others disagree.
The decision whether to take Vytorin or its component drugs rests with patients, but they rely heavily on the advice of their doctors? How can patients makes sense of this debate? More...
12 Feb 2008
The Market for Moving:
Migration patterns and the cost of moving
by Richard Belzer
in Regulatory Economics
Today's Wall Street Journal includes an editorial arguing that high taxes cause people to move, and low taxes help determine where they go. What caught our eye was they reported data showing that it is more expensive to move from a high-tax city with declining population (Philadelphia and Los Angeles are given as examples) to cities in low-tax states with increasing population (Nashville, Dallas, Austin and Las Vegas are given as examples).
The Journal says "the eight states without an income tax are stealing talent from other states." Do differences in the cost of moving by direction of the move provide supporting evidence of this hypothesis? More...
6 Feb 2008
The Perils of Regulatory Policymaking by Opinion Poll:
Consumer Reports on "health care reform"
by Richard Belzer
in Regulatory Economics, Regulatory Policy
Consumer Reports has sponsored a poll on health care that yielded results characterized as "revealing a significant disconnect." But there is no disconnect at all if elementary economic analysis is applied. More...
3 Jan 2008
Where to Have a Cardiac Arrest?
Answer: not in the hospital
by Richard Belzer
in Information Quality, People & Institutions, Regulatory Science
New York Times reporter Denise Grady previews a research report due to be published in today's New England Journal of Medicine that says many hospitals do not respond quickly enough to cardiac arrest. Leslie Saxon, who wrote an accompanying editorial, delivered the money quote: “You’re better off having your arrest at Nordstrom, where I’m standing right now, because there are 15 people around me.” More...
31 Dec 2007
Immigration Economics and the Wall Street Journal:
A marriage with irreconcilable differences
by Richard Belzer
in Regulatory Economics
Policy debates about illegal immigration almost always can be illuminated by careful data collection and analysis. Sometimes, data are nice but aren't necessary because elementary economic theory is sufficient to predict the direction (if not the magnitude) of effects. Today, the Wall Street Journal editorializes that new "data tell a very different story" than the picture emerging from "[t]alk radio hosts, cable newscasters and Presidential hopefuls." We're not sure which of these claims the Journal is seeking to refute, but we can show that it has failed to achieve its objective. More...
24 Nov 2007
How Not to Save Money on Gasoline
Spending money to save money
by Richard Belzer
in Regulatory Economics
Gasoline prices exceed $3 per gallon almost everywhere in the U.S. In some isolated locations, retail prices now exceed $4 per gallon. The Los Angeles Times relates how some people take seeming irrational steps to "save money." More...
6 Nov 2007
The Economics of Cell-Phone Jammers:
A case study in government misallocation of property rights
by Richard Belzer
in Regulatory Economics, Regulatory Policy
New York Times reporter Matt Richtel seems to have set off a pandemic news stories and commentaries with his profile of "otherwise respectable people" who use jamming devices to illegally obstruct the cell phone conversations of people nearby. Based on groundswell of support that appears to have formed for jammers, this looks like a problem worthy of a small amount of economic analysis
As it happens, there are simple market-based solutions. The real problem is that the federal government has preempted them by disallowing market forces to work. One thing should be clear: jammers have appeared on the market because there is considerable consumer demand for them. That means there used to be a "market failure," and this market failure will persists as long the federal government insists on sustaining it. More...
20 Aug 2007
Health Insurance and Incentives:
Ending reimbursements for certain hospital-acquired conditions
by Richard Belzer
in Regulatory Economics
For most Americans, third-party insurance companies reimburse health care providers based on the diagnosis-related group codes (DRGs) originally established by Medicare. When Medicare changes policies, it is likely that private health insurance companies will follow. Recently, the Centers for Medicare & Medicaid Services announced a policy change on reimbursements for "hospital-acquired conditions" -- a bureaucratic term for medical errors.
Until now, a hospital could be reimbursed for the costs of treating Medicare patients will ailments resulting from hospital mistakes. Under the new regulation, if a surgeon amputates the wrong limb or leaves an object behind after surgery, or hospital staff administer an incompatible blood type or permit an air embolism, CMS will not reimburse the added cost of subsequent treatment. The policy change is intended to give health care providers a financial incentive to avoid committing these errors.
In our discussion below, be analyze one specific medical error of special interest: mediastinitis.
More...16 Aug 2007
The Continuing Battle Between CO2 Puritans and Pragmatists, Part 2:
Carbon offsets come under increasing scrutiny
by Richard Belzer
in Regulatory Economics, Regulatory Policy
The battle between CO2 Puritans and CO2 Pragmatists continues. More...
29 Jul 2007
Differential Pricing of College Education:
Charging more for certain majors
by Richard Belzer
in Regulatory Economics
It is an anomaly of the higher education market that there are widespread differences in price both across and within colleges and universities, but historically a student's choice of major has not been a pricing criterion. Universities are beginning to experiment with differential pricing, though apparently with considerable apprehension. More...
