Adverse selection, moral hazard, and outlier payment policy

In this article, we analyze the rationale for introducing outlier payments into a prospective payment system for hospitals under adverse selection and moral hazard. The payer has only two instruments: a fixed price for patients whose treatment cost is below a threshold and a cost-sharing rule for outlier patients. We show that a fixed-price policy is optimal when the hospital is sufficiently benevolent. When the hospital is weakly benevolent, a mixed policy solving a trade-off between rent extraction, efficiency, and dumping deterrence must be preferred. We show how the optimal combination of fixed price and partially cost-based payment depends on the degree of benevolence of the hospital, the social cost of public funds, and the distribution of patients severity. [Authors]

Are the Policy Preferences of Relatively Poor Citizens Under-represented in the Swiss Parliament?

The principle of equal political representation can be undermined by differences in economic resources among citizens. Poor citizens are likely to hold policy preferences that differ from those of richer citizens. At the same time, their lack of resources can have as a consequence that these preferences are not taken into consideration by their representatives. Focusing on the case of the Swiss Parliament and using survey data on the opinions of citizens and MPs in the 2007-2011 legislature, this study investigates whether the income of citizens systematically affects the proximity of their policy preferences with stances of their representatives. It demonstrates that on economic issues MPs hold preferences that are generally less in favour of the state's intervention in the economy than the median citizen and that relatively poor citizens are less well represented as compared to citizens with high incomes. This remains true when taking into account only the opinions of the most knowledgeable citizens among these groups as well as when the focus is only on those who turned out to vote.

Mycobacterium tuberculosis transmission in a country with low tuberculosis incidence: role of immigration and HIV infection.

Immigrants from high-burden countries and HIV-coinfected individuals are risk groups for tuberculosis (TB) in countries with low TB incidence. Therefore, we studied their role in transmission of Mycobacterium tuberculosis in Switzerland. We included all TB patients from the Swiss HIV Cohort and a sample of patients from the national TB registry. We identified molecular clusters by spoligotyping and mycobacterial interspersed repetitive-unit-variable-number tandem-repeat (MIRU-VNTR) analysis and used weighted logistic regression adjusted for age and sex to identify risk factors for clustering, taking sampling proportions into account. In total, we analyzed 520 TB cases diagnosed between 2000 and 2008; 401 were foreign born, and 113 were HIV coinfected. The Euro-American M. tuberculosis lineage dominated throughout the study period (378 strains; 72.7%), with no evidence for another lineage, such as the Beijing genotype, emerging. We identified 35 molecular clusters with 90 patients, indicating recent transmission; 31 clusters involved foreign-born patients, and 15 involved HIV-infected patients. Birth origin was not associated with clustering (adjusted odds ratio [aOR], 1.58; 95% confidence interval [CI], 0.73 to 3.43; P = 0.25, comparing Swiss-born with foreign-born patients), but clustering was reduced in HIV-infected patients (aOR, 0.49; 95% CI, 0.26 to 0.93; P = 0.030). Cavitary disease, male sex, and younger age were all associated with molecular clustering. In conclusion, most TB patients in Switzerland were foreign born, but transmission of M. tuberculosis was not more common among immigrants and was reduced in HIV-infected patients followed up in the national HIV cohort study. Continued access to health services and clinical follow-up will be essential to control TB in this population.

Massive nest-box supplementation boosts fecundity, survival and even immigration without altering mating and reproductive behaviour in a rapidly recovered bird population.

Habitat restoration measures may result in artificially high breeding density, for instance when nest-boxes saturate the environment, which can negatively impact species' demography. Potential risks include changes in mating and reproductive behaviour such as increased extra-pair paternity, conspecific brood parasitism, and polygyny. Under particular cicumstances, these mechanisms may disrupt reproduction, with populations dragged into an extinction vortex. With the use of nuclear microsatellite markers, we investigated the occurrence of these potentially negative effects in a recovered population of a rare secondary cavity-nesting farmland bird of Central Europe, the hoopoe (Upupa epops). High intensity farming in the study area has resulted in a total eradication of cavity trees, depriving hoopoes from breeding sites. An intensive nest-box campaign rectified this problem, resulting in a spectacular population recovery within a few years only. There was some concern, however, that the new, high artificially-induced breeding density might alter hoopoe mating and reproductive behaviour. As the species underwent a serious demographic bottleneck in the 1970-1990s, we also used the microsatellite markers to reconstitute the demo-genetic history of the population, looking in particular for signs of genetic erosion. We found i) a low occurrence of extra-pair paternity, polygyny and conspecific brood parasitism, ii) a high level of neutral genetic diversity (mean number of alleles and expected heterozygosity per locus: 13.8 and 83%, respectively) and, iii) evidence for genetic connectivity through recent immigration of individuals from well differentiated populations. The recent increase in breeding density did thus not induce so far any noticeable detrimental changes in mating and reproductive behaviour. The demographic bottleneck undergone by the population in the 1970s-1990s was furthermore not accompanied by any significant drop in neutral genetic diversity. Finally, genetic data converged with a concomitant demographic study to evidence that immigration strongly contributed to local population recovery.

Social Policy Preferences and Party Choice in the 2011 Swiss Elections

To what extent do social policy preferences explain party choice? This question has received little attention over the past years, because the bulk of the literature has argued that electoral choice is increasingly shaped by identity-based attitudes, rather than by preferences for economic-distributive social policies. We argue that in the wake of this debate, the significance of social policy preferences for electoral choice has been underestimated, because most contributions neglect social policy debates that are specific to post-industrial societies. In particular, they merely focus on income redistribution, while neglecting distributive conflicts around social investment. The Selects 2011 data allows investigating this crucial distinction for Switzerland. Our empirical analyses confirm that it is pivotal to take the pluridimensionality of distributive conflicts seriously: when looking at preferences for social investment rather than income redistribution, we find that social policy preferences are significant explanatory factors for the choice of the five major Swiss political parties.

Evidence-based Economic Policy - Three Essays in Applied Microeconometrics

Over thirty years ago, Leamer (1983) - among many others - expressed doubts about the quality and usefulness of empirical analyses for the economic profession by stating that "hardly anyone takes data analyses seriously. Or perhaps more accurately, hardly anyone takes anyone else's data analyses seriously" (p.37). Improvements in data quality, more robust estimation methods and the evolution of better research designs seem to make that assertion no longer justifiable (see Angrist and Pischke (2010) for a recent response to Leamer's essay). The economic profes- sion and policy makers alike often rely on empirical evidence as a means to investigate policy relevant questions. The approach of using scientifically rigorous and systematic evidence to identify policies and programs that are capable of improving policy-relevant outcomes is known under the increasingly popular notion of evidence-based policy. Evidence-based economic policy often relies on randomized or quasi-natural experiments in order to identify causal effects of policies. These can require relatively strong assumptions or raise concerns of external validity. In the context of this thesis, potential concerns are for example endogeneity of policy reforms with respect to the business cycle in the first chapter, the trade-off between precision and bias in the regression-discontinuity setting in chapter 2 or non-representativeness of the sample due to self-selection in chapter 3. While the identification strategies are very useful to gain insights into the causal effects of specific policy questions, transforming the evidence into concrete policy conclusions can be challenging. Policy develop- ment should therefore rely on the systematic evidence of a whole body of research on a specific policy question rather than on a single analysis. In this sense, this thesis cannot and should not be viewed as a comprehensive analysis of specific policy issues but rather as a first step towards a better understanding of certain aspects of a policy question. The thesis applies new and innovative identification strategies to policy-relevant and topical questions in the fields of labor economics and behavioral environmental economics. Each chapter relies on a different identification strategy. In the first chapter, we employ a difference- in-differences approach to exploit the quasi-experimental change in the entitlement of the max- imum unemployment benefit duration to identify the medium-run effects of reduced benefit durations on post-unemployment outcomes. Shortening benefit duration carries a double- dividend: It generates fiscal benefits without deteriorating the quality of job-matches. On the contrary, shortened benefit durations improve medium-run earnings and employment possibly through containing the negative effects of skill depreciation or stigmatization. While the first chapter provides only indirect evidence on the underlying behavioral channels, in the second chapter I develop a novel approach that allows to learn about the relative impor- tance of the two key margins of job search - reservation wage choice and search effort. In the framework of a standard non-stationary job search model, I show how the exit rate from un- employment can be decomposed in a way that is informative on reservation wage movements over the unemployment spell. The empirical analysis relies on a sharp discontinuity in unem- ployment benefit entitlement, which can be exploited in a regression-discontinuity approach to identify the effects of extended benefit durations on unemployment and survivor functions. I find evidence that calls for an important role of reservation wage choices for job search be- havior. This can have direct implications for the optimal design of unemployment insurance policies. The third chapter - while thematically detached from the other chapters - addresses one of the major policy challenges of the 21st century: climate change and resource consumption. Many governments have recently put energy efficiency on top of their agendas. While pricing instru- ments aimed at regulating the energy demand have often been found to be short-lived and difficult to enforce politically, the focus of energy conservation programs has shifted towards behavioral approaches - such as provision of information or social norm feedback. The third chapter describes a randomized controlled field experiment in which we discuss the effective- ness of different types of feedback on residential electricity consumption. We find that detailed and real-time feedback caused persistent electricity reductions on the order of 3 to 5 % of daily electricity consumption. Also social norm information can generate substantial electricity sav- ings when designed appropriately. The findings suggest that behavioral approaches constitute effective and relatively cheap way of improving residential energy-efficiency.

Attitudes of detainees and prison staff towards tobacco control policy in Switzerland: a qualitative interview study.

PURPOSE: To explore detainees and staff's attitudes towards tobacco use, in order to assist prison administrators to develop an ethically acceptable tobacco control policy based on stakeholders' opinion. DESIGN: Qualitative study based on in-depth semi-structured interviews with 31 prisoners and 27 staff prior (T1) and after the implementation (T2) of a new smoke-free regulation (2009) in a Swiss male post-trial prison consisting of 120 detainees and 120 employees. RESULTS: At T1, smoking was allowed in common indoor rooms and most working places. Both groups of participants expressed the need for a more uniform and stricter regulation, with general opposition towards a total smoking ban. Expressed fears and difficulties regarding a stricter regulation were increased stress on detainees and strain on staff, violence, riots, loss of control on detainees, and changes in social life. At T2, participants expressed predominantly satisfaction. They reported reduction in their own tobacco use and a better protection against second-hand smoke. However, enforcement was incomplete. The debate was felt as being concentrated on regulation only, leaving aside the subject of tobacco reduction or cessation support. CONCLUSION: Besides an appropriate smoke-free regulation, further developments are necessary in order to have a comprehensive tobacco control policy in prisons.

Identity, immigration, and prejudice in Europe: a recognition approach

Social identity is a double-edged sword. On the one hand, identifying with a social group is a prerequisite for the sharing of common norms and values, solidarity, and collective action. On the other hand, in-group identification often goes together with prejudice and discrimination. Today, these two sides of social identification underlie contradictory trends in the way European nations and European nationals relate to immigrants and immigration. Most European countries are becoming increasingly multicultural, and anti-discrimination laws have been adopted throughout the European Union, demonstrating a normative shift towards more social inclusion and tolerance. At the same time, racist and xenophobic attitudes still shape social relations, individual as well as collective behaviour (both informal and institutional), and political positions throughout Europe. The starting point for this chapter is Sanchez-Mazas' (2004) interactionist approach to the study of racism and xenophobia, which in turn builds on Axel Honneth's (1996) philosophical theory of recognition. In this view, the origin of attitudes towards immigrants cannot be located in one or the other group, but in a dynamic of mutual influence. Sanchez-Mazas' approach is used as a general framework into which we integrate social psychological approaches of prejudice and recent empirical findings examining minority-majority relations. We particularly focus on the role of national and European identities as antecedents of anti-immigrant attitudes held by national majorities. Minorities' reactions to denials of recognition are also examined. We conclude by delineating possible social and political responses to prejudice towards immigrants.