2018, No. 4

Abstracts of Selected Recent NBER Working Papers

Cross-State Variation in Health Care Utilization of SSDI Beneficiaries: Evidence from Medicare Claims
Joyce Manchester

Using 100 percent Medicare Part B fee-for-service (FFS) claims in 2012 for people under age 65, I examine office and outpatient services by state and primary diagnosis for the service. The number of services per Medicare-eligible beneficiary in the U.S. Social Security Disability Insurance (SSDI) program was about 32 in 2012, or 2.7 per month, comparable to services for the 65+ Medicare population. The number of services for SSDI beneficiaries ranged from almost 48 per capita in Minnesota to 23 in Arkansas. Services for musculoskeletal impairments averaged 4.6 per capita, ranging from 6.7 in Minnesota to 2.5 in Hawaii. The greatest variation occurred in services for mental disorders, averaging 3.2 for the U.S. but ranging from 9.1 in Massachusetts to 1.4 in Alabama. Factors such as the number of health care professionals or hospital beds per capita, the share enrolled in Medicare Advantage, and demographic factors are associated with health care utilization across states. Knowledge of health care utilization could inform policy choices for programs such as early intervention efforts both at the federal level and tailored to particular needs at the state level.

Local Food Prices, SNAP Purchasing Power, and Child Health
Erin T. Bronchetti, Garret S. Christensen, Hilary W. Hoynes

The Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) is one of the most important elements of the social safety net. Unlike most other safety net programs, SNAP varies little across states and over time, which creates chal-lenges for quasi-experimental evaluation. Notably, SNAP benefits are fixed across 48 states; but local food prices vary, leading to geographic variation in the real value — or purchasing power — of SNAP benefits. In this study, we provide the first estimates that leverage variation in SNAP purchasing power across markets to examine effects of SNAP on child health. We link panel data on regional food prices to National Health Interview Survey data and use a fixed effects framework to estimate the relationship between local purchasing power of SNAP and children’s health and health care utilization. We find that lower SNAP purchasing power leads to lower utilization of preventive health care and more days of school missed due to illness. We find no effect on reported health status.

Financial Fraud among Older Americans: Evidence and Implications
Marguerite DeLiema, Martha Deevy, Annamaria Lusardi, Olivia S. Mitchell

The consequences of poor financial capability at older ages are serious and include making mistakes with credit, spending retirement assets too quickly, and being defrauded by financial predators. Because older persons are at or past the peak of their wealth accumulation, they are often the targets of fraud. Our project analyzes a module we developed and fielded in the 2016 Health and Retirement Study (HRS). Using this dataset, we evaluate the incidence and risk factors for investment fraud, prize/lottery scams, and account misuse, using regression analysis. Relatively few HRS respondents mentioned any single form of fraud over the prior five years, but nearly 5% reported at least one form of investment fraud, 4% recounted prize/lottery fraud, and 30% indicated that others had used/attempted to use their accounts without permission. There were few risk factors consistently associated with such victimization in the older population. Fraud is a complex phenomenon and no single factor uniquely predicts victimization. The incidence of fraud could be reduced by educating consumers about various types of fraud and by increasing awareness among financial service professionals.

Guns and Violence: The Enduring Impact of Crack Cocaine Markets on Young Black Males
William N. Evans, Craig Garthwaite, Timothy J. Moore

Crack cocaine markets were associated with substantial increases in violence in the U.S. during the 1980s and 1990s. Using cross-city variation in the emergence of these markets, we show that the resulting violence has important long-term implications for understanding current levels of murder rates by age, sex and race. We estimate that the murder rate of young black males doubled soon after crack's entrance into a city, and that these rates were still 70 percent higher 17 years after crack's arrival. We document the role of increased gun possession as a mechanism for this increase. Following previous work, we show that the fraction of suicides by firearms is a good proxy for gun availability and that this variable among young black males follows a similar trajectory to murder rates. Access to guns by young black males explains their elevated murder rates today compared to older cohorts. The long run effects of this increase in violence are large. We attribute nearly eight percent of the murders in 2000 to the long-run effects of the emergence of crack markets. Elevated murder rates for younger black males continue through to today and can explain approximately one tenth of the gap in life expectancy between black and white males.

Financial Incentives and Earnings of Disability Insurance Recipients: Evidence from a Notch Design
Philippe Ruh, Stefan Staubli

Most countries reduce Disability Insurance (DI) benefits for beneficiaries earning above a specified threshold. Such an earnings threshold generates a discontinuous increase in tax liability—a notch—and creates an incentive to keep earnings below the threshold. Exploiting such a notch in Austria, we provide transparent and credible identification of the effect of financial incentives on DI beneficiaries' earnings. Using rich administrative data, we document large and sharp bunching at the earnings threshold. However, the elasticity driving these responses is small. Our estimate suggests that relaxing the earnings threshold reduces fiscal cost only if program entry is very inelastic.

Are Health Care Services Shoppable? Evidence from the Consumption of Lower-Limb MRI Scans
Michael Chernew, Zack Cooper, Eugene Larsen-Hallock, Fiona Scott Morton

We study how individuals with private health insurance choose providers for lower-limb MRI scans. Lower-limb MRI scans are a fairly undifferentiated service and providers' prices routinely vary by a factor of five or more across providers within hospital referral regions. We observe that despite significant out-of-pocket cost exposure, patients often received care in high-priced locations when lower priced options were available. Fewer than 1 percent of individuals used a price transparency tool to search for the price of their services in advance of care. The choice of provider is such that, on average, individuals bypassed 6 lower-priced providers between their home and the location where they received their scan. Referring physicians heavily influence where their patients receive care. The influence of referring physicians is dramatically greater than the effect of patient cost-sharing. As a result, in order to lower out-of-pocket costs and reduce total MRI spending, patients must diverge from the established referral pathways of their referring physicians. We also observe that patients with vertically integrated (i.e. hospital-owned) referring physicians are more likely to have hospital-based (and more costly) MRI scans.

The Impact of Information Disclosure on Consumer Behavior: Evidence from a Randomized Field Experiment of Calorie Labels on Restaurant Menus
John Cawley, Alex Susskind, Barton Willage

The impact of information on consumer behavior is a classic topic in economics, and there has recently been particular interest in whether providing nutritional information leads consumers to choose healthier diets. For example, a nationwide requirement of calorie counts on the menus of chain restaurants took effect in the U.S. in May, 2018, and the results of such information disclosure are not well known. To estimate the impact of menu labeling, we conducted a randomized controlled field experiment in two full-service restaurants, in which the control group received the usual menus and the treatment group received the same menus but with calorie counts. We estimate that the labels resulted in a 3.0% reduction in calories ordered, with the reduction occurring in appetizers and entrees but not drinks or desserts. Exposure to the information also increases consumers' support for requiring calorie labels by 9.6%. These results are informative about the impact of the new nationwide menu label requirement, and more generally contribute to the literature on the impact of information disclosure on consumer behavior.

Changes in Household Diet: Determinants and Predictability
Stefan Hut, Emily Oster

We use grocery purchase data to analyze dietary changes. We show that households — including those with more income or education — do not improve diet in response to disease diagnosis or changes in household circumstances. We then identify households who show large improvements in diet quality. We use machine learning to predict these households and find (1) concentration of baseline diet in a small number of foods is a predictor of improvement and (2) dietary changes are concentrated in a small number of foods. We argue these patterns may be well fit by a model which incorporates attention costs.

Mergers and Marginal Costs: New Evidence on Hospital Buyer Power
Stuart Craig, Matthew Grennan, Ashley Swanson

We estimate the effects of horizontal mergers on marginal cost efficiencies — an ubiquitous merger justification — using data containing supply purchase orders from a large sample of U.S. hospitals 2009-2015. The data provide a level of detail that has been difficult to observe previously, and a variety of product categories that allows us to examine economic mechanisms underlying "buyer power." We find that merger target hospitals save on average $176 thousand (or 1.5 percent) annually, driven by geographically local efficiencies in price negotiations for high-tech "physician preference items." We find only mixed evidence on savings by acquirers.

NBER Working Papers on Health and Aging
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