JEP links

from the ungated Journal of Economic Perspectives, Spring 2023

The entire issue is freely available. I will comment on articles I found interesting, without linking specifically to each one.

Victor Couture and Jessie Handbury write,

The share of downtown residents with a college degree rose threefold between 1980 and 2017, from 15 to 45 percent, and downtown areas reverted from being the least-educated to being the most-educated areas of US cities. This gentrification of the United States’s downtown areas had a strong age and racial bias. Over the last few decades, college graduates who are young and white experienced much larger changes in their propensity to live downtown than any other demographic group.

…When higher-income people move to a neighborhood, its local amenities adjust to match their tastes and budgets. Improving schools and local services make those neighborhoods even more attractive to higher-income people, thus amplifying neighborhood change. Because the rich can outbid the poor for housing in neighborhoods that become more desirable, and because new housing is often difficult to build in land-constrained downtowns, rapidly rising housing costs further exacerbate the welfare impact of downtown gentrification

If you believe Raj Chetty on the effect of social networks, then the poor folks who got to rub elbows with these new affluent neighbors became more upwardly mobile. I bet not.

Also, if you believe Moses Sternstein’s chart on net migration of working-age college graduates, those college-educated folks have turned around and are now fleeing the big cities.

Concerning health care, Katherine Baicker, Amitabh Chandra, and Mark Shepard write,

We argue that incremental expansions focused on addressing market failures in the current US system will propagate inefficiencies in our patchwork approach and will fail to facilitate the active policy decisions needed to achieve socially optimal coverage. By instead defining a basic bundle of valuable services that is publicly financed for all, while allowing individuals to “top up” by purchasing additional coverage, policymakers could both expand coverage to the uninsured and maintain incentives for innovation in a financially sustainable system.

You could have the Federal government provide everyone with the medical procedures and treatments that were available in 1975, or with anything that is cheaper today. Then let people “top up” to receive the latest and greatest. Topping up could include receiving assistance from state and local governments or charity.

With less than 10 percent of health care spending out of pocket, when people evaluate capital-intensive and specialist-intensive medical procedures, they compare the benefits with zero, and they choose this premium medicine, as I call it. If they were to compare benefits with costs, they might choose differently. Knowing how unlikely it is to affect the treatment plan, you might not get that MRI for your back if you have to pay for it yourself,

Concerning government-subsidized health insurance in low and middle income countries, Jishnu Das and Quy Toan Do write,

Health outcomes have not improved despite an increase in utilization. We argue that this is not because there was no room to improve the quality of care but because behavioral responses among healthcare providers have systematically undermined the objectives of these insurance schemes.

But “health outcomes have not improved” is what you always observe when insurance coverage rises and health care spending goes up. See Robin Hanson. See Crisis of Abundance. That’s why I don’t think it would be inhumane to give people a baseline level of care that would have been state of the art 50 years ago.

Concerning mental illness, Richard G. Frank and Sherry A. Glied write,

Too few people with treatable mental health conditions, including those with serious illness, obtain care that could help them. This situation may arise, in part, because the decisions of people suffering from mental illness to seek care may not accurately reflect the likely value of such care to themselves and to others, as well as because of underinvestment in treatment capacity for the most serious conditions.

…Issues of stigma and our incomplete ability to distinguish between levels of need and to match conditions and treatments will continue to test our abilities to cope with mental illnesses efficiently and humanely.

I suspect that we were better off when churches and local charities were the “first responders” for poor people with mental illness. It takes compassion and flexibility to deal with mental illness, and that is not the comparative advantage of government bureaucracies. But over the last fifty years, resources have flowed away from local organizations and toward Washington. Freddie deBoer thinks we were better off when mental hospitals were not reviled and compulsive treatment was more prevalent.

In general, economic publications have a very strong bias in favor of papers that show what government can do to solve problems. My takes reflect the fact that I have lived long enough to see urban poverty, mental illness, childhood education deficiencies, and “problems with our health care system” manage to survive in spite of all of these well-researched solutions. Or maybe I’m just an old libertarian crank.

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