Am I finally Famous? Interview in La VANGUARDIA March 10 2018

I was interviewed and photographed for Barcelona’s major newspaper, LA VANGUARDIA, and the results appeared on Saturday, March 10 on the La Contra page, which is the most widely read part of that paper since it is on the last page and tries to be controversial. Because it is published in Catalan (a language spoken in Spain), it only paraphrases what I said. It seems to reflect what I said very well, which was mostly about healthcare in the US and Spain and Obamacare. The only error is in saying I earned my PhD from Harvard instead of MIT.

I have had more complements about this article than any of my others (in US, Australian, Colombian, Icelandic, French, German, and Danish). Perhaps because the Catalans really like their newspapers!

I especially like the picture!

Below are the links.

Use this link to view it in (imperfect) English using Google Translator.







Medicaid recipients are already working, fraud in SNAP is 1%, and Medicare would be cut

It is nice while on sabbatical to avoid the fray of politics, but our president’s recent attack on Medicaid, SNAP (food stamps) and Medicare makes me want to share the following three sets of links.

The bottom line of the Medicaid video (4:52) summary of two studies is that “able bodied” eligibles represent only about 3% of Medicaid recipients – about the same as the unemployment rate.

The bottom line of the September 5, 2017 press release from the US Department of Agriculture study of fraud in the SNAP program is that fraud remains at about one percent of payments, where it has been since 2006-2008. Less than most public OR private activities.

The bottom line on Trump’s own budget report is that he is lying and yes they are asking for major cuts to Medicare.

Here are the links.


Healthcare Triage News: But, But, Medicaid Recipients Are Already Working

Posted: 15 Feb 2018 05:24 AM PST

Recently, the Trump administration put forward plans to force all the able-bodied lazy people with Medicaid coverage to finally get jobs. The problem with this is that pretty much all the Medicaid recipients who can work already have jobs. So, how’s all this going to work?


SNAP program fraud.


This is from a Press Release dated September 5, 2017 on the US Department of Agriculture web site.


The DOA examines and reports on fraud regularly. The latest report summarizes it as  “approximately one cent on the dollar”. This is very low compared to most public or private activities.

Here is a longer quote.
“The report indicates that the vast majority of trafficking – the illegal sale of SNAP benefits for cash or other ineligible items – occurs in smaller-sized retailers that typically stock fewer healthy foods. Over the last five fiscal years, the number of retailers authorized to participate in SNAP has grown by over 40 percent; small- and medium-sized retailers account for the vast majority of that growth. The rate of trafficking in larger grocery stores and supermarkets—where 82 percent of all benefits were redeemed—remained low at less than 0.5 percent.

While the overall trafficking rate has remained relatively steady at approximately one cent on the dollar, the report attributes the change in the rate to 1.3 percent primarily to the growth in small- and medium-sized retailers authorized to accept SNAP that may not provide sufficient healthful offerings to recipients.



I looked over the Trump administration’ budget proposal. My own view is that some of it is reasonable, but much of it reflects the usual politically infeasible projects that will never be approved by Congress but will distract voters and news coverage from the more substantive problems with the budget, such as the increased defense spending, the Wall, the lack of infrastructural investment, and the ridiculous tax cuts. It will be viewed as a victory when congress agrees NOT to cut Medicare.  But it will be a hollow victory. There is no way around the fact that it cuts certain Medicare benefits as many others have noted  – take your pick (Reuters, Bloomberg, CNBC, ThinkProgress) and violates his promises in 2016. Or if you prefer fantasy you can just listen to Fox News that reports “Trump would again spare Social Security retirement benefits and Medicare as he promised during the 2016 campaign.”


Impact of the GOP tax reform on tax-favored donations

This extended blog will mostly be of interest to Americans thinking about end of year tax strategies. It extends a discussion among some Yale colleagues about the current tax bill as well as some calculations based on web sources. This blog focuses on the new high standard deduction and the Alternative Minimum Tax (AMT) provisions, and what it means for charitable donations. Much of it is oriented toward income earners earning $150k-500k. There are of course many, many other features of the new tax bill not examined.

My glimpse at the new tax tables, included below, are that most people in the range from $150-500k will see tax cuts of their marginal rate of about 2-6%, unless they are affected by the AMT. Those affected by the AMT will see significant lump sum gains but marginal rates that are similar to this years, at 26 or 28 percent.

This discussion will be complex for many unless you are used to thinking about the tax subsidies for donations and the implications for timing of donation. (Most people donate because it just feels good.)

My bottom line is at the bottom of this email. COMMENTS/CORRECTIONS WELCOME.

I am not a tax expert and you should get expert advice before acting on anything you read here.

The standard deduction is proposed to be raised to $24,000 for a married couple filing jointly. More important are the AMT changes for high income people.

So under the new system a married couple can claim itemized deductions (look at Sch A of your return for last year for this amount) of a minimum of $24,000, ($12k if single) even if they have no itemized deductions.

The main itemized deductions for most people are mortgage interest, state and local income and property taxes, and charitable contributions.

Base case: Assume you don’t have any mortgage interest and your 2017 itemized deductions are say $40,000 in state income and property taxes, and $5,000 in charitable contributions:

Under current law you claim itemized deductions of $45,000 which is more than the standard deduction.

Under proposed 2018 law the allowable itemized deductions will be $10,000 state income and property taxes plus $5,000 for the donations. So if a person claims the standard deduction of $24,000 – he gets this regardless of whether he makes a charitable contribution of nil or $14,000.  So the first 14k of charitable deductions doesn’t produce a tax benefit.

Wrinkle 1:


If you have deductible mortgage interest next year (Say $10,000) from an existing first mortgage next year, then the interest on it can be added to your $10,000 of local property taxes and the threshold for donations affecting your taxes would be only $4000. Since 10k+10k+4k=$24,000.

Wrinkle 1a: home equity line of credit mortgage interest is no longer deductible at all.

Wrinkle 1b: for any new mortgages taken out after Dec 15, 2017, only the interest on the first $750k of home mortgage will be deductible.


Important Wrinkle 2:

If your income is subject to the alternative  minimum  tax (AMT) for 2017 then the marginal value of a deduction this year is either 26 or 28 percent, depending on where you are in the phase out of the AMT, since these are the AMT income marginal rates. Your AMT is calculated from your income without taking most deductions but after a moderately large exemption. The AMT is based on your Alternative Minimum Taxable Income AMTI (See intuitive discussion  below).  Call this Y. Taxes are applied to Y minus the AMT standard exemption, call it Z, which is $84,500 for joint filers and $54,300 for others. The exemption starts to phase out once your income exceeds Q=$160,900 for joint filers, and $120,700 for singles. Under the proposed new tax bill, the AMT exemption (Z) is increased and the point at which the exemptions begin to be phased out are increased, but the tax rates remain the same. Z is decreased by $.25 for each dollar  of AMTI above the phase out threshold Q.


The following focuses on joint filers and are based on a recent article by the Tax foundation (Link below).


Currently, if Y your AMT income is $160,900 then the AMT tax is

AMT=.26*(Y-Z) = .26*(160,900-84,500)=$19,864


If your AMT income is 250k then your AMT tax would be




Z = 84,500-.25(250,000-160,900)  (reflecting the phase out of the exemption starting at 160,900)

AMT=0.28*(Y-Z) = .28*(250000-62225) = $52,577


If your income is 500,000 at which the exemption Z is currently fully phased out, then your AMT would be

AMT = .28*(500000 – 0) = $140k.


(The .26 rate applies when your Y = AMTI is less than $187,800, while the “higher rate”  of 28% applies to more than that. This step also creates modest infra-marginal changes that I have ignored. Silly complexity…)


The current law raises the exemption amounts, and also raises the threshold at which the exemption starts to be  phased out.


“Exemption amounts under the conference agreement are increased from their current level of $84,500 for joint filers and $54,300 for other filers to $109,400 and $70,300, respectively.”


More importantly, the AMT exemption does not begin to phase out until alternative minimum taxable income exceeds $1 million for joint filing households. So for the three households just examined the new AMT amounts would be:


AMT only kicks in at AMTI >= 160,900.


At Y = 160,900: AMT=.26*(Y-Z) = .26*(160,900-109,400)=$13,390 a reduction of $6,474 from the existing AMT tax.

At Y = $250,000 AMT = .28*(Y-Z) = .28*(250,000-109,400)=$36,556 a reduction of $16,021

At Y=$500,000: AMT = .28*(Y-Z) = 0.28*(500,000-109,400) = $109,400 a reduction of $30,632

You can interpolate pretty well between these amounts using the following figure. The slight nonlinearity results from the change from 26% to 28% at Y=187, reform fig 1 2017


These AMT amounts are only relevant when they are more than the taxable income calculated using the normal way (using deductions and the standard exemptions). For many, these AMT changes are the gifts of the current tax reform.


So the AMT, which currently affects about half of all HH  with incomes above $200k is projected to affect a smaller number of people after the reform mostly because of the higher exemption.


This AMT change is a big cost component of the current reform, but gets less attention since it is harder to explain.


“All told, the Joint Committee on Taxation estimated that these [AMT] changes would reduce federal revenues by $637.1 billion over the next decade, compared to current law.” This is 42% of the total deficit increase!


Here is a brief, non-technical discussion of the Alternative Minimum Taxable Income AMTI.

Some of these items added back into your income include personal exemptions, state and local income taxes, miscellaneous itemized deductions and mortgage interest on home equity debt. Accordingly, you’re more likely affected by AMT if you have a high number of exemptions (a larger family), high state income and property taxes and/or high miscellaneous itemized deductions like significant investment management fees.

You may also have to include certain types of income that you wouldn’t normally count in your regular taxable income, such as exercising incentive stock options or tax-exempt interest from private activity bonds. The disallowance of deductions and addition of income leads to your Alternative Minimum Taxable Income (AMTI).

For 2017, you pay a tax rate of 26% on AMTI of $187,800 or less for those filing single, married filing jointly, head of household or qualify widower. For married filing separate taxpayers, the income threshold stops at $93,900.  The tax rate grows to 28% of income over those amounts. Multiplying your AMTI minus your exemption times the corresponding tax rate gives you your tentative minimum tax.

You may have some additional tax due if you reported capital gains distributions, qualified dividends, and/or used the foreign tax credit, but your software should add those for you.

You should note that AMT is only the difference between your regular income tax and the tentative minimum tax amount calculated through AMT. For example, if you owed $30,000 in regular income tax and your tentative minimum tax amount was $33,000, AMT of $3000 will show up on line 45 of your Form 1040.



Here is another discussion from CBSNews.


What’s the deal with the alternative minimum tax?

For corporations, the AMT disappears.

That’s not the case for individual filers, but fewer will have to pay it, at least.

  • Exemption amounts will increase from $84,000 for joint filers under the current law level to $109,400. Single filers will see that number increase from $54,300 to $70,300.
  • The exemption currently phases out for joint filers at $160,900, and $120,700 for individuals. Under the tax bill, that phaseout would kick in at $1 million for married filers and $500,000 for those who are single. Above the threshold, filers lose 25 percent of their exemption, that is, $0.25 on every dollar in income.

What if I give to charity?

The charitable deduction will remain as it is. So, if you itemize your deductions, you may be able to deduct charitable contributions that are made to qualifying organizations. According to the IRS, you may deduct up to 50 percent of your adjusted gross income, although some filers are limited to 20 percent and 30 percent.


Here are the current “final” tax rates and intervals as of 10:30 am Tuesday morning.

See below for a breakdown of the proposed income tax brackets for singles.

Rate Taxable Income Bracket
10% 0 to $9,525
12% $9,525 to $38,700
22% $38,700 to $82,500
24% $82,500 to $157,500
32% $157,500 to $200,000
35% $200,000 to $500,000
37% $500,000 and up

Here are the proposed rates for married couples who file jointly.

Rate Taxable Income Bracket
10% 0 to $19,050
12% $19,050 to $77,400
22% $77,400 to $165,000
24% $165,000 to $315,000
32% $315,000 to $400,000
35% $400,000 to $600,000
37% $600,000 and up

For comparison, here would be the 2018 brackets under current tax law, adjusted for inflation.

Rate Taxable Income Bracket-Single Taxable Income Bracket-Married Filing Jointly
10% 0 to $9,525 0 to $19,050
15% $9,525 to $38,700 $19,050 to $77,400
25% $38,700 to $93,700 $77,400 to $156,150
28% $93,700 to $195,450 $156,150 to $237,950
33% $195,450 to $424,950 $237,950 to $424,950
35% $424,950 to $426,700 $424,950 to $480,050
39.60% $426,700 and up $480,050 and up


Here it is in a graph for joint filers. This assumes everyone just takes the standard deduction of $24,000.

tax reform fig 2 2017

Of course, low income people are not likely to have deduction that exceed the $24,000 standard deduction while high income people are more likely to. Most of the changes are only visible at the higher income levels…


Putting together the new tax schedule with the new AMT taxes, and assuming joint filers only take the $24,000 standard deduction, the following reveals the key role that the new AMT plays.

tax reform fig 3 2017


For people who have lots of possible deductions under the new tax system, the AMT places a much lower minimum on tax payments than the old one.

The new AMT schedule is substantially more attractive to high income salary earners affected by the AMT. The relevant tax rate for them is 28%.

Not shown in this figure is that eventually the difference between the existing and new AMT disappears at about $1.4 million.


My bottom line from this is:


In general, under the new tax program, bunching of charitable donations and concentration of deductions into a single year will be attractive, so that you  might take the standard deduction one year and not the next.


The AMT makes it unclear whether bunching in 2017 is particularly worthwhile relative to 2018, since the 26% or 28% rates in the AMT may be less than the new marginal rate next year when combined with a more favorable AMT in future years. In short, a large donation this year may mean that on the margin you only get a 26-28% tax subsidy, while a donation next year may have a 33-37% deduction for large donors with moderately high incomes (<$500k).


For salary earners not affected by the AMT, donations this year are likely to be more favored than next year, when the lower rates and higher thresholds for tax rates will matter.


If you want to take a deduction for a donation THIS YEAR but decide who it goes to next year, you could open a  Donor advised fund, such as at Fidelity.


My bottom, bottom line is that I don’t expect large tax savings from moving around deductions between this year and next if you are affected by the AMT. A good strategy is to give what feels right.


Of course, all of this is based on the current tax bill, which could change or not be passed…



(This warning is mostly to protect me in case I am wrong.)


Three great books to read

While on sabbatical this year, I have been enjoying some extra reading. I have just added two new books and one old one to my favorites list on my web site. I recommend them all highly to you.

The Undoing Project: A Friendship That Changed Our Minds Michael Lewis Dec 6, 2016 This remarkable and easy to read book is written as a biography of two Israelis, Daniel Kahneman and Amos Tversky, but along the way covers a long list of their remarkable insights and experiments. I highly recommend it to people who tried to read the original, dense book Thinking, Fast and Slow by Kahneman and Tversky, two pioneers of behavioral economics.

Decisive: How to Make Better Choices in Life and Work. Chip Heath and Dan Heath, Mar 26, 2013. This is more of a how-to book for business managers and anyone about ways of making better decisions, but along the way it has a nice overview of the many biases and irrationalities in our thought process. First example: when asked to choose between A and B, don’t. Instead figure out how to do A+B or something else even better. Lots of anecdotes and brief research summaries.

Blink: The Power of Thinking Without Thinking Malcolm Gladwell 2007. I read this book a long time ago, but added it here since it remains a very powerful and important book. I recommend and have read almost all of Malcolm Gladwell’s work (See especially Outliers and The Tipping Point). His work gives important insights into how people actually make decisions, which are often based on simple heuristics and very little information compared to how decisions are typically modeled by economists.

Holiday cheers, congrats to BU, and a psychedelic BU alumni site from 1970-1997!

Today, the first day of Hanukah and two weeks before Christmas and Kwanza, I am writing to wish my colleagues and my BUHealth blog readers a peaceful and happy holiday, whatever your faith background. I am loving my sabbatical at Boston College this fall and looking forward to our stay in Barcelona starting in mid-January. I feel fortunate to be healthy and happy in my warm home.

In case you missed it, you may be happy to hear that BU moved up even further in the Times Higher Education ranking, to become sixth in the world for “employability”.

The quotes and discussion by BU president Bob Brown are excellent and emphasizes BU’s recent history. But I think another strong reason BU is so well-known internationally is our long history of training top leaders from all over the globe, particularly PhD students in economics. The following link is not up-to-date nor is it BU supported, but this web page created by BU emeritus professor Oldrich Kyn in the late 1990s shows how successful BU was at creating world leaders and scholars all over the globe back then. Check it out when you have ten+ minutes to explore your favorite countries or track down a country-mate BU alum in your own home country. It is interesting to see the remarkable achievements of BU alumni in an era when South Asian, African and Latin American PhD students outnumbered the East Asian and Europeans. Even then, Americans were a modest minority in the PhD program, as they are today. You get to decide how you like Oldrich’s psychedelic colorizing of mostly old black and white images…

Arranged by country, type of job and alphabet:


US health spending and global burden of disease

I want to thank Veronica Vargas for sending me the following link from the Institute for Health Metrics and Evaluation (IHME) , which features innovative ways of displaying different cuts of US and international data from a massive data files. Viewing this site will perhaps take you fifteen minutes or more to get a feel. It is staffed by the University of Washington, but appears to be funded largely by the Gates Foundation. It has been around for a while, but they are making a big push on its features this fall.

The first link decomposes spending in the US by  disease, by broad type of service (pharmacy, IP, OP, Dentist, ER).

They document the well-known result that about half of the US increase is due to price increases, not intensity or illness, although aging and pop growth contribute.US costs are higher than the rest of the world largely because our prices paid for all types of care are much higher than elsewhere. And increasingly so.


Here is a direct link to the interesting interactive figures. Try the four different tabs across the top if you are curious. (Is a little slow on my wireless laptop.)

It allows you to drill down to questions such as how much was spent on individual disease for certain ages, on emergency department.

If you click on “visualizations“ in the upper right, you get different views that can be plotted, which are very extensive.

Or start here


Below is a link to the article originally posted, along with a sample figure.


Factors associated with increases in US health care spending, 1996–2013

Here is one that lets you choose one or compare two or more countries disease burdens along multiple dimensions.

The say that their mission includes sharing data for researchers. Here is a link to various data that they support and document with a nice search tool.


Global Burden of Disease module lets you answer questions as specific as how many people die of air pollution in India in 2013.

Here is how they describe it.

September 14, 2017

GBD Compare

Data Visualization

Learn more

Analyze updated data about the world’s health levels and trends from 1990 to 2016 in this interactive tool. Use treemaps, maps, arrow diagrams, and other charts to compare causes and risks within a country, compare countries with regions or the world, and explore patterns and trends by country, age, and gender. Drill from a global view into specific details. Compare expected and observed trends. Watch how disease patterns have changed over time. See which causes of death and disability are having more impact and which are waning.

This is not a site oriented toward hypothesis testing, although it does include confidence intervals on many estimates (which seem to only reflect sampling precision, not other sources of uncertainty such as the quality of the underlying data.) For me, the main use will be in writing in the introduction of a paper so as to summarize how large a problem is, or how many people have a given condition, or how it is growing etc. The international breadth is stunning. At a different level, it is a good example of how big data can be manipulated using “cubes” and different cuts of the data to show fascinating patterns (girls less than 1 year cost $11,000 each on average, which drops to $1,600 age 5-9, and it is not until age 65 in the US that female mean cost is again over $11,000. It peaks at $31,000 per year over age 85.)


Be forewarned: you can spend a lot of time playing around…



The quintessential challenge of our time

“…the quintessential challenge of our time: the ascendance of belief over fact, outrage over thoughtful debate, and the accessibility of an endless supply of “information” that confirms our preexisting beliefs, whatever they may be. In a sociopolitical climate in which disgust often substitutes for disagreement, many people recognize the futility of using evidence to establish common ground, but few seem to know what to do about it.”


From Lisa Rosenbaum, M.D. Understanding the Planned Parenthood Divide — Albert Lasker and Women’s Health

New England Journal of Medicine, November 1, 2017DOI: 10.1056/NEJMp1713518

BU to be well represented at the ASSA 2018 annual meetings

Dear BU colleagues, students, alumni, and friends,

Even though I am just beginning my sabbatical, I thought I would do this tabulation from the preliminary program of the ASSA (Allied Social Science Association) annual meetings which will be in Philadelphia January 5-7, which is linked here.  .

I apologize for any names that I have inadvertently missed, but creating this list requires looking through 11,000 names of authors, chairs and discussants for familiar names, and sometimes checking their affiliations. If you send corrections to me, I will correct them on my blog which is linked here.

BU will not quite set a record for presence at the 2018 ASSA (commonly called simply the AEA American Economics Association) meetings with BU faculty, students or alumni names appearing 71 times.  The last time I counted was for the 2015 ASSA meetings, which were held in Boston, and BU had 83 appearances, but with a home field  advantage.


Of those 71 appearances there are

43 presenters or coauthors (ASSA does not differentiate them in the program)

18 discussants

10 session chairs.


Of those 71 appearances,

34 are by CAS Economics Department faculty (20 distinct names – two more than the Boston ASSA!)

14 are by Questrom School of Business faculty (6 distinct names)

22 are by current or former BU students. (20 distinct names)


The busiest participant this year will be our new associate professor Tarek Hassan, with four papers presented and one session chaired. This impressive activity spearheads the remarkable ten appearances from the five new BU faculty joining us in Economics this fall. Others who will be busy with three appearances each include Kevin Lang, Robert Margo, Pascual Restrepo.

Join me in congratulating our busiest scholars who are presenting (or coauthored a presentation), chairing and discussing at the ASSA in January. There will be a BU reception on Saturday evening as usual – look for announcements in the fall for the time and room.

A detailed list of papers and names that may help with planning your travel, learning what your colleagues are up to or making corrections are below. They are sorted chronologically by time.

It is not too early to begin planning which paper you want to present at the ASSA 2019 (Atlanta).


Here are the details

Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Liberty Ballroom Salon A

Forecasting Economic Activity With Yelp Data

Michael Luca, Harvard Business School View Abstract


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Grand Ballroom Salon C

The Role of Countercyclical Fiscal Policy in a Low r* World

Alisdair Mckay, Boston University View Abstract


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 104-A

Trade in Unhealthy Foods and Obesity: Evidence From Mexico

Osea Giuntella, University of Pittsburgh View Abstract


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 306

Issues in Development 

Discussant(s) Silvia Prina, Case Western Reserve University


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 112-A

Surviving the Great Depression: Firms, Workers, and Banks

Discussant(s) Robert Margo, Boston University


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Grand Ballroom Salon J

Discussant(s) James Rebitzer, Boston University

How Important Is Price Variation Between Health Insurers?

Keith Ericson, Boston University, View Abstract

How Does Hospital-physician Integration Affect Hospital Prices?

Haizhen Lin, Indiana University View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 105-A


Chair: Pascual Restrepo, Boston University


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 111-A

Household Diversification: The Vehicle Portfolio Effect

David Rapson, University of California-Davis View Abstract

Mind the Gap! Tax Incentives and Incentives for Manipulating Fuel Efficiency in the Automobile Industry

Shinsuke Tanaka, Tufts University View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 104-B

The Demise of the Treaty of Detroit and (Dis)inflation Dynamics

Jae Sim, Federal Reserve Board View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 104-A

Sectoral Wage Gaps and the Returns to Migration

Discussant(s) Samuel Bazzi, Boston University


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 109-A

Migrants, Ancestors, and Foreign Investments

Tarek A. Hassan, Boston University, NBER, and CEPR View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Loews Philadelphia, Commonwealth Hall D

Misvaluation of Investment Options

Evgeny Lyandres, Boston University View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Grand Ballroom Salon J

Screening in Contract Design: Evidence From the ACA Health Insurance Exchanges

Timothy Layton, Harvard University View Abstract


Friday, Jan. 5, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 202-B

Domestic Outsourcing of Labor Services in the United States: 1996-2015

Johannes F. Schmieder, Boston University View Abstract


Friday, Jan. 5, 2018 2:30 PM – 4:30 PM Marriott Philadelphia Downtown, Grand Ballroom Salon F

Automation and Jobs: When Technology Boosts Employment

James Bessen, Boston University View Abstract


Friday, Jan. 5, 2018 2:30 PM – 4:30 PM Pennsylvania Convention Center, 104-A

The Provision and Valuation of Non-wage Job Attributes

Chair: Kevin Lang, Boston University

Discussant(s) Kevin Lang, Boston University


Friday, Jan. 5, 2018 2:30 PM – 4:30 PM Loews Philadelphia, Regency Ballroom C1

Macro Finance

Discussant(s)  Simon Gilchrist, Boston University (now NYU!)


Friday, Jan. 5, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 202-B

Right to Work and Small “d” Democracy

James Feigenbaum, Princeton University (now at BU) View Abstract


Friday, Jan. 5, 2018 2:30 PM – 4:30 PM Pennsylvania Convention Center, 203-A

Missing Bids

Juan Ortner, Boston University View Abstract

The Competitive Effects of Information Sharing

Jihye Jeon, Boston University  View Abstract


Friday, Jan. 5, 2018 2:30 PM – 4:30 PM Loews Philadelphia, Adams

The Importance of Deposit Insurance Credibility

Joao Santos, Federal Reserve Bank of New York View Abstract


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 201-A

Housing Wealth Effects: The Long View

Alisdair McKay, Boston University View Abstract

Adam Guren, Boston University View Abstract


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 112-A

Monetary Policy and Financial Intermediation

Chair: Simon Gilchrist, Boston University


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Grand Ballroom Salon A

Noncompete Agreements

Chair: Michael Lipsitz, Boston University

Restricting Mobility to Extract Surplus: Why Low-wage Workers are Signing Noncompete Agreements

Michael Lipsitz, Boston University View Abstract

Matthew S. Johnson, Duke University View Abstract


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 308

Whither the Future of Economic History?

Chair: Robert Margo, Boston University


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 405

Firm Responses to Incentives and Regulation

Discussant(s) Marc Rysman, Boston University


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 409

Trade, Multinationals, and Firm Dynamics

Chair: Stefania Garetto, Boston University

Becoming a Multinational: An Analysis of Market Access and Risk Through Mergers

Stefania Garetto, Boston University View Abstract


Saturday, Jan. 6, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Grand Ballroom Salon J

Coordination Within Teams and The Cost of Health Care

Keith Ericson, Boston University View Abstract

Benjamin Lupin, Boston University  View Abstract

James Rebitzer, Boston University View Abstract


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Pennsylvania Convention Center, 202-A

Economics of Voting

Chair: Steven Sprick Schuster, Colgate University


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Grand Ballroom Salon J

Gender in the Workplace

Discussant(s) Kevin Lang, Boston University


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Loews Philadelphia, Regency Ballroom C1

Currency Manipulation

Tarek A. Hassan, Boston University, NBER, and CEPR View Abstract


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Loews Philadelphia, Commonwealth Hall A2

Sex, Race and Finance

Discussants(s) Shulamit Kahn, Boston University


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Meeting Room 414

Network and Panel Quantile Effects Via Distribution Regression

Ivan Fernandez-Val, Boston University View Abstract


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Meeting Room 415

Local Labor Markets and Human Capital Investments

Russell Weinstein, Rensselaer Polytechnic Institute View Abstract


Saturday, Jan. 6, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Meeting Room 305

Technology and Jobs in the Long Run

James Bessen, Boston University View Abstract


Saturday, Jan. 6, 2018 12:30 PM – 2:15 PM Pennsylvania Convention Center, 203-B

Economic Growth and Banking Credit in India

Subhash Pemmaraju, Boston University View Abstract



Saturday, Jan. 6, 2018 12:30 PM – 2:15 PM Marriott Philadelphia Downtown, Grand Ballroom Salon C

Recent Studies in Applied Microeconomics

Discussant(s) Jihye Jeon, Boston University


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Marriott Philadelphia Downtown, Meeting Room 308

CSMGEP Dissertation Session

Discussant(s) Robert Margo, Boston University


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Marriott Philadelphia Downtown, Grand Ballroom Salon E

Demographics and Robots

Pascual Restrepo, Massachusetts Institute of Technology (now at BU) View Abstract


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Pennsylvania Convention Center, 202-B

Foreign STEM Students and Immigration Policy

Chair: Shulamit Kahn, Boston University

Explaining the Place Premium in STEM Careers

Shulamit Kahn, Boston University View Abstract

Megan MacGarvie, Boston University and NBER View Abstract


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Pennsylvania Convention Center, 107-B

Childhood Exposure to Armed Conflict and Attitudes Toward Domestic Violence

Giulia La Mattina, University of South Florida View Abstract


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Pennsylvania Convention Center, 105-A

Policy Implications of Suboptimal Choice: Theory and Evidence

Discussant(s) Keith Ericson, Boston University


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Marriott Philadelphia Downtown, Meeting Room 414

Market Microstructure

Discussant(s) Juan Ortner, Boston University


Saturday, Jan. 6, 2018 2:30 PM – 4:30 PM Marriott Philadelphia Downtown, Meeting Room 406

Predicting Outcomes in Games: New Directions

Discussant(s) Bart Lipman, Boston University


Sunday, Jan. 7, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Grand Ballroom Salon E

The Race between Machine and Man: Implications of Technology for Employment, Factor Shares and Growth

Pascual Restrepo, Massachusetts Institute of Technology View Abstract


Sunday, Jan. 7, 2018 8:00 AM – 10:00 AM Pennsylvania Convention Center, 204-C

Political Risk: Origins, Measurement, and Effects

Chair: Tarek A. Hassan, Boston University, NBER, and CEPR

Discussant(s) Stephen Terry, Boston University

Firm-level Political Risk: Measurement and Effects

Tarek A. Hassan, Boston University, NBER, and CEPR View Abstract


Sunday, Jan. 7, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 309

Changes in Marriage and Divorce as Drivers of Employment and Retirement of Older Women

Dana Rotz, Mathematica View Abstract


Sunday, Jan. 7, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 410

Estimation and Inference with a (Nearly) Singular Jacobian

Adam McCloskey, Brown University View Abstract


Sunday, Jan. 7, 2018 8:00 AM – 10:00 AM Marriott Philadelphia Downtown, Meeting Room 415

Top Income Inequality

Discussant(s) Johannes F. Schmieder, Boston University


Sunday, Jan. 7, 2018 10:15 AM – 12:15 PM Marriott Philadelphia Downtown, Meeting Room 309

Sovereign Default

Discussant(s)Tamon Asonuma, International Monetary Fund

Sovereign Bond Prices, Haircuts and Maturity

Tamon Asonuma, International Monetary Fund View Abstract


Sunday, Jan. 7, 2018 10:15 AM – 12:15 PM Loews Philadelphia, Commonwealth Hall C

Firm Selection and Corporate Cash Holdings

Berardino Palazzo, Boston University View Abstract


Sunday, Jan. 7, 2018 10:15 AM – 12:15 PM Loews Philadelphia, Commonwealth Hall A2

What Do Insiders Know? Evidence From Insider Trading Around Share Repurchases and SEOs

Evgeny Lyandres, Boston University View Abstract


Sunday, Jan. 7, 2018 1:00 PM – 3:00 PM Pennsylvania Convention Center, 104-B

African Leaders, Longevity, Policies, and Impacts

Discussant(s) Kehinde Ajayi, Boston University


Sunday, Jan. 7, 2018 1:00 PM – 3:00 PM Pennsylvania Convention Center, 104-A

Vertical Integration in the Health Care Market

Chair: Haizhen Lin, Indiana University

What Came First – Loyalty or Integration? A Look at the Motivation for Hospital-physician Alignment

Haizhen Lin, Indiana University and NBER View Abstract


Sunday, Jan. 7, 2018 1:00 PM – 3:00 PM Marriott Philadelphia Downtown, Meeting Room 410

Robust Likelihood-ratio Tests for Incomplete Economic Models

Hiroaki Kaido, Boston University View Abstract

Yi Zhang, Boston University View Abstract



ACA premiums are reasonable, grew modestly in 2016, and risk scores are stable.

Here are the results from CMS reports from June 30, 2017 and 2016:

2016 National average premium in the ACA Marketplace: $414.54 (CMS, 2017, page 9.)

This is less than the (employee plus employer) premiums offered where I work. This number includes the cost of the subsidies that are not paid by the enrollee.

2015 to 2016 Percentage changes in enrollment weighted monthly premium for ACA Marketplace plans:

  • 7.4% change in Individual market
  • 2.0 % small group market
  • 0.9 % change in catastrophic plans
  • 5.8 % change in national average ACA premiums

(Sources:  CMS, 2017, Table 3 and CMS 2016, Table 3.

The high growth rates that have been featured in the media are not representative of changes in the averages, or are distorted by calculations using only the consumer share of premiums, which are often heavily subsidized.

“Risk scores were stable in the individual market and decreased by 4 percent in the small group market.“  CMS, 2017, page 5.

There was no evidence of a death spiral nationally, or that the exchanges are unsustainable nationwide, even if some states are in trouble because they did not allow the Medicaid expansion or promote the exchange.


Summary Report on Transitional Reinsurance Payments –…/Summary-Reinsurance-Payments-Risk-2016.pdf…/June-30-2016-RA-and-RI-Summary-Report-5CR-063016.pdf

Instead of the national averages, the media has generally been discussing outliers. Plus this data shows that the average health status in the plans was stable, not exploding last year. There is no evidence nationally of a death spiral.

These national average monthly premiums ($414) are lower than the total premiums for single coverage plans offered at Boston Unviersity (currently $636 and $599 for employer+employee contributions).

The following July 21 2017 report from the Wakely Consulting Group ( a consulting firm) is the most up to date analysis  I have seen.

A Preliminary Analysis of the 2016 Summary of ACA Risk Adjustment Transfers and Reinsurance Payments

ACA versus GOP plans side-by-side

This article from the LA Times by columnist Noam Levey links an update on earlier postings online that does a side-by-side comparison of ACA versus the GOP’s replacement AHCA plan. That posting provides the best concise overview I have seen of the latest GOP AHCA proposal. It will take 10 minutes to review/read. Randy

Here is the comparison


Here is the new article, which features specific effects.


From: Levey, Noam []
Sent: Sunday, June 25, 2017 9:44 PM
To: Levey, Noam
Subject: ICYMI: New article on the disruptive impact of the Senate repeal bill

Good day,

In case you missed it, I wanted to share my latest piece examining the potentially devastating impact of the recently released Senate legislation to roll back the Affordable Care Act.

The Republican architects of the bill, like their House counterparts, hail their legislation as a remedy for ills caused by the current law. But across the country, in physicians’ offices and medical centers, in state capitols and corporate offices, there is widespread fear the unprecedented cuts in the GOP bills would create even larger problems in the U.S. healthcare system, threatening to not only strip health coverage from millions, but also upend insurance markets, cripple state budgets and drive medical clinics and hospitals to the breaking point. As Tom Tom Priselac, chief executive of Cedars Sinai Health System in Los Angeles, told me: “These reductions are going to wreak havoc.”

Here is the link:

I hope you find the piece interesting. Thank you, as always, for reading. All best,


Noam N. Levey

National healthcare reporter

Los Angeles Times Washington Bureau

Tel: 202-824-8317

Cell: 202-247-0811

twitter: @NoamLevey

Performance Timer is excellent App

I was at a conference last week and learned about a terrific timer for my iPhone called Performance Timer. It counts down your specified time, and then changes from green to red as you go over.

What makes it superior to the default iPhone timer is its large font, there is no alarm when time is up, and your screen never goes blank, so you can read it for your entire talk. Really easy interface for the stressful time that you are setting it up. Or, if you are the timekeeper for someone else, they will be able to read it from 20 feet.

It is free in the Apple App store.  I looked but did not find the Android version.

Here is a review from the web.

Performance Timer on the App Store – iTunes – Apple

Rating: 5 – ‎9 reviews – ‎Free – ‎iOS – ‎Utilities/Tools


Performance Timer is a large-display countdown timer developed to be used to monitor the time remaining in a performance, presentation, etc. Performance Timer does not sound an alarm when the time runs out. Rather, when the timer reaches zero, the numbers turn red and the timer starts counting up so that you can see how long you’ve gone over your target time. The time can be set from 1 to 99 minutes.

Excellent articles about machine learning and replication

There is a wonderful article about Machine learning in the spring 2017 issue of the Journal of Economic Perspectives, and there is also a series of four fine articles in the AER May 2017. I decided to share as a BUHealth blog to all.

Whether you are curious, newly interested or an expert working in the area, I recommend the JEP one to you. The AER series is for more serious work. Here are the links (They should all be free to access, since they are all at the AEA.) Also see below for links on replication.

Machine Learning: An Applied Econometric Approach

Download Full Text PDF


Machine Learning in Econometrics (May, 2017)

Double/Debiased/Neyman Machine Learning of Treatment Effects

Victor Chernozhukov, Denis Chetverikov, Mert Demirer, Esther Duflo, Christian Hansen and Whitney Newey

(pp. 261-65)

Testing-Based Forward Model Selection

Damian Kozbur

(pp. 266-69)

Core Determining Class and Inequality Selection

Ye Luo and Hai Wang

(pp. 274-77)

Estimating Average Treatment Effects: Supplementary Analyses and Remaining Challenges

Susan Athey, Guido Imbens, Thai Pham and Stefan Wager

(pp. 278-81)


The series in the AER on Replication in microeconomics will also be of interest.  This article title speaks for itself.

A Preanalysis Plan to Replicate Sixty Economics Research Papers That Worked Half of the Time

Replication in Microeconomics

Assessing the Rate of Replication in Economics

James Berry, Lucas C. Coffman, Douglas Hanley, Rania Gihleb and Alistair J. Wilson

(pp. 27-31)

Replications in Development Economics

Sandip Sukhtankar

(pp. 32-36)

Replication in Labor Economics: Evidence from Data, and What It Suggests

Daniel S. Hamermesh

(pp. 37-40)

A Proposal to Organize and Promote Replications

Lucas C. Coffman, Muriel Niederle and Alistair J. Wilson

(pp. 41-45)

Replication and Ethics in Economics: Thirty Years after Dewald, Thursby, and Anderson

What Is Meant by “Replication” and Why Does It Encounter Resistance in Economics?

Maren Duvendack, Richard Palmer-Jones and W. Robert Reed

(pp. 46-51)

Replication and Economics Journal Policies

Jan H. Höffler

(pp. 52-55)

Replication, Meta-analysis, and Research Synthesis in Economics

Richard G. Anderson and Areerat Kichkha

(pp. 56-59)

A Preanalysis Plan to Replicate Sixty Economics Research Papers That Worked Half of the Time

Andrew C. Chang and Phillip Li

(pp. 60-64)



Congratulations to BU’s Class of 2017 Economics graduates!

Please celebrate the students who earned 556 degrees in Economics at Commencement this May!

This year the program honors:

14 Ph.D. recipients

215 Master’s degree recipients (MA, MAPE, MAEP, MAGDE MA/MBA, BA/MA)

327 BA recipients (including BA/MA)

This total of 556 degrees is up from 498  (12%) since 2016.

These numbers may undercount the total for the year since they may exclude some students who graduated in January.

In 2017 there were 14 PhDs, 215 Master’s degree recipients, and 327 BA recipients

In 2016 there were 22 PhDs, 203 Master’s degree recipients, and 273 BA recipients

In 2015 there were 22 PhDs, 155 Master’s degree recipients, and 305 BA recipients.

In 2014 there were 17 PhDs, 207 Master’s degree recipients, and 256 BA recipients.

Altogether 13 Ph.D. students obtained jobs this year (versus 24 last year).

To see the Ph.D. placements visit the web site linked here.

The department’s  website now lists 39 regular faculty (up one from last year) with titles of assistant, associate or full professors, a number which is one below the number of professors in 2012 (five years ago) listed on the commencement programs. Here are the recent counts of faculty.

2017: 39 tenured or tenure-track faculty, of which 3 are women (8%); 12 non-TT faculty, of which 3 are women (25%); 51 total faculty, of which 6 are women (12%)

2016: 38 tenured or tenure-track faculty, of which 5 are women (8%);  7 non-TT faculty, of which 1 are women (14%); 47 total faculty, of which 6 are women (12%)

2015: 40 tenured or tenure-track faculty, of which 5 are women (12%); 7 non-TT faculty, of which 2 are women (29%); 47 total faculty, of which 7 are women (15%)

2014: 41 tenured or tenure-track faculty, of which 6 are women (15%); 4 non-TT faculty, of which 1 is a woman (25%); 45 total faculty, of which 7 are women (16%)

Congratulations to all!

Let the Children and Grandchildren Pay (More)

This blog revisits a posting from four years ago, in a series on Time to Change the Tax Discussion.

Whenever Congress (federal or state) proposes legislation that cuts taxes or increases net spending so that our national debt will increase, they should have to end every statement about why they favor their proposal with …

Because I want our children and grandchildren to pay for it.

Even if congress or the executive branch won’t say this, that is what they are doing.

The US House yesterday passed the American Health Care Act (AHCA) bill by a narrow margin that dramatically cuts taxes on the wealthy and raises burdens on the poor without even waiting for the CBO or others to calculate the impact on our total budget of this new trillion dollar proposal. The earlier AHCA bill was scored by the CBO as reducing the federal deficit, but doing so in a very painful, unfair way.

Since I have also urged people to think of bills in terms of their cost per household, not just in terms of billions and trillions of dollars, I present the numbers here as costs per US household (all 125 million of them).

The March 13, 2017 CBO scoring of the previous, kinder, version of the AHCA projected that the bill would cut taxes in the amount of $900 billion over ten years, which is $7200 per US household. This is a huge wealth transfer, the majority of which go to the wealthy. The CBO cites Urban Institute researchers in their estimate that 70.6% of the tax cuts go to the 6% of households with incomes over $200,000. These cuts largely arise from eliminating the Medicare payroll tax rate for high-income taxpayers, the surtax on those taxpayers’ net investment income, and the annual fees imposed on health insurers. These tax cuts have virtually no effect on health care spending or the delivery system, but are a give-away to high income Americans, imposing burdens on our children and grandchildren. They are the preamble to the much larger tax cuts that president Trump proposed on April 26 in his one-page tax cut “proposal”, which is a simplified version of his campaign proposal in 2015. Both tax cuts greatly increase the national debt by tens of thousands of dollars per household, yet have arguably received less attention in the media than the $2 per household cut in the Planned Parenthood budget (CBO, 2017 AHCA report, Table 2).

Offsetting these large tax cuts, the March 13 CBO rating of the AHCA projects that it will cut direct spending by $1,219 billion ($9,752 per household) over ten years. Unlike the tax cuts, which favor the wealthy, the spending cuts impact disproportionately the poor, the sick, and the old. The Urban Institute estimates that almost 77 percent of the federal funding losses come from families learning less than $30,000. So the bottom 36 percent of households is sacrificing $1000 of health support so that the top 6 percent of households can save an average of roughly $6,000 each.

Unlike the tax cuts for the wealthy, which will mostly increase savings and wealth, spending cuts on the poor directly affects their consumption spending, debt, and spending. The AHCA spending cuts will directly affect children since nearly half of them are close to poverty. We are not talking about making future children pay, but today’s children.

The following figure, based on data in the CBO report on the AHCA, show how different the tax cuts are from the benefit decreases. the forecast was made by the Urban Institute for 2022, hence reflects the fully phased in impact of the changes.

The AHCA is being sold to the public as promoting growth (implausible when it comes out of current consumption), lowering premiums (the opposite of the CBO projections), and avoiding the “catastrophe of the ACA” (not the consensus view).  Cutting the ACA subsidies and protections will force many not to buy health insurance, or to pay much more for their health care if they do. How can this stimulate the economy?

Taxes will never be attractive, but why should we LET THE CHILDREN AND GRANDCHILDREN PAY?

Economist article about end of life planning

One of my students today just sent me this link to an article in this week’s Economist about end-of-life planning.

How to have a better death

It led me to also view its link about conversations about serious illness by one of my favorite authors.

“Serious Illness Conversation Guide” drawn up by Atul Gawande

I also found these slides targeting providers informative as well.

Using the Serious Illness Conversation Guide – HealthInsight

I found it informative that CMS (Medicare) created two new Advance Care Planning (ACP) codes. It will be interesting to see how often they are used.

Two new codes created in 2015, allowed for payment by Medicare in 2016.

  • 99497 ACP 30 minutes $85.99
  • 99498 ACP additional 30 minutes $74.88

CPT describes eligible services as being performed by a physician or “other qualified health professional” which means a physician, NP or PA.

We could save a lot of money and improve happiness and quality of life if more doctors, nurses, families and patients talked about these issues.


#stupideconomics and Healthcare Triage on the AHCA

Two interesting links related to the recent Republican health care proposal called the AHCA.

The first is a serious but also humorous Forbes article by my BU colleague Larry Kotlikoff in his series about Stupid Economics, this one targeting Tom Price and the AHCA bill. (A 3-minute read.)

Tom Price’s Liver And ‘The Coverage They Want’

The second is an excellent Youtube summary of the CBO forecasts (called “scoring”) of the effects of the AHCA by pediatrician Aaron Carroll.

Healthcare Triage: Results Are In! Congressional Budget Office Scores the American Health Care Act

Posted: 17 Mar 2017 06:09 AM PDT  Text of the report here.

(Broadcast is eight minutes.)

$147 Billion: The Economic Cost of Trump Racism

Bottom line:

Trump’s racism predicted to cost US households $147 billion in extra payments to the rest of the world.

Like many people, I am appalled by president Trump’s recent executive order banning refugees – and even US legal immigrants  – from seven predominantly Muslim countries from entering the country. In the process, Trump has also angered most of the world’s 1.6 billion Muslims, comprising about 23% of the global population. Many of these countries (e.g,. OPEC members) hold major financial assets in the US. President Trump has also been active about insulting Mexico and China, two other huge financial partners with the US.

Since Trump is a businessman, I am going to focus on why this racism is a really bad idea for the US economy.

According to US Treasury, US national debt held by the public as of last Friday, Jan 26, 2017 was 14.4 trillion dollars.  That is over $42,000 borrowed on your behalf per US resident. Last year (2016), the interest paid on that debt was $432 billion, or over $3,456 per American household  per year. (US census numbers estimate 125 million households currently). Of that total debt, about 34% is owned by international Investors, and we are paying them the interest on their holdings. So that is $1,175 per US household being paid out to foreigners last year before Trump became president.

Although my good colleague Larry Kotlikoff worries that this level of debt, particularly to foreigners, is not sustainable, that is not what I want to focus on here. I want to focus instead on the CHANGE in these debt payments to foreigners that can be attributed to scary Trump’s racism. According to the current US Treasury documents, the long term interest rate has increased by more than a half percentage point since Trump was elected. Look at the figure yourself. The increase when Trump was elected was immediate. Even faster than the stock market advance.

Increasing the interest rate on the national debt from 2 percent to 2.5 percent costs Americans an extra $294 per household EVERY YEAR until our debt is paid off, which will probably be never.

Now imagine that OPEC, or the Chinese, or the Mexicans decide that they are not so happy with the US anymore and decide to start dumping their $6.8 trillion of US debt. We should all expect that  Trumps racist policies will cause federal interest rates to increase to 4% per year, up another 2% above its rates before Trump. This doubling of US debt interest rates will result in an additional $1,175 per US household per year being paid out to foreigners. Or another $147 billion in total interest paid out to the rest of the world for our debts.

That is my prediction of what will happen if Trump does not change his racist policies.

Notice that I did not have to do any calculations based on the effects of Trump’s racism on foreign tourism in the US ($168 billion in 2012), spending on US universities by foreigners ($30 billion in 2015), or US exports to China  ($113 billion in 2015) or Mexico ($267 billion in2015).  Trump’s tax cuts and deficit spending policies are also likely to increase interest rates. It would be easy for much larger estimates to be generated.

Take home lessons:

  • Racist policies are bad ethically and bad for our economy.
  • There is a real danger of serious interest rate increases that will cost everyone a lot of money.
  • Bond prices are likely to fall and long term bonds seem like a poor investment choice.
  • It helps with your arguments if you use facts and citations instead of making things up.
  • So far, instead of having Mexico pay for Trump’s Stupid Wall, Trump’s racist policies are making Americans pay more to Mexico and China and Iran and Saudi Arabia, and….




Read this posting on Stupid Economics

I invite you to read this Forbes posting on Stupid Economics by Laurence Kotlikoff.


I don’t always agree with my dear colleague, Larry Kotlikoff, but this posting at Forbes is one that I can really get behind.

Our president needs to start listening to serious economists instead of acting solo as an autocrat.


This article is a two minute read that will make you smile regardless of whether you agree with all of the sentiments.


Larry is a serious scholar, of course, and his credentials include not only nineteen books, but also a stint on the Council of Economic Advisors under president Reagan.


From: [] On Behalf Of Laurence Kotlikoff
Sent: Thursday, January 26, 2017 1:10 PM
To: faculty-econ-list; phd-econstudents-list
Subject: This may be of interest.



Let me know if I’m being unfair. But I think it’s time to call this for what it is.


best, Larry


Laurence J. Kotlikoff

A William Fairfield Warren Professor, Boston University
Professor of Economics, Boston University
270 Bay State Rd.
Boston, MA 02215

President, Economic Security Planning, Inc.
cell  617 834-2148
work 617 353-4002

The Ellis-Huber Christmas Poem 2016

The Raven                      The Ellis-Huber Christmas Poem 2016

Once upon a year so dreary, politics so wild and weary,
Arguments so quaint and curious, unfamiliar use of lore—
While I nodded, sometimes napping, suddenly there came a yapping,
As of candidates gently snapping, snapping as if t’were a war.
“’Tis only a primary,” I muttered, “yapping I have heard before—
Only this and nothing more.”

But the yapping became more noisy, as the prospects grew less rosy
Scared me—filled me with fantastic terrors never felt before;
So that now, to still the beating of my heart, I stood repeating
“’Tis only a primary entreating entrance at the White House door—
Some strange visitor entreating entrance at the mansion door;—
This it is and nothing more.”

Presently concern grew stronger; hesitating then no longer,
Words like “Sir” and “Madam”, scarce-used civil words appeared no more;
Soon the facts no longer mattered as emotions became more shattered,
Soon opinions grew more scattered, chattered just outside my door,
Not quite sure that I had heard it—here I opened wide the door;—
Darkness there and nothing more.

Ah, distinctly I remember it was in the bleak September;
And each separate dying ember wrought its ghost upon the floor.
Eagerly I tried to ignore it, even though I still deplored it
All my thoughts were filled with sorrow—sorrow for the lost true core—
Came the thought so sad and evil, worse time since the Wizard war—
Trump is our Lord Voldemort.

November came as we were fearing, long we stood there wondering, tearing,
Wishing undone, dreaming dreams no liberal dared to dream before;
But the silence was unbroken, and the election gave no token,
And the words e’er spoken were whispered words, “Lord Voldemort?”
This I whispered, and an echo murmured back, “Lord Voldemort.”—
Merely this and nothing more.

Now December, feeling bitter, as the trees begin to glitter,
Soon again I hear a twitter somewhat louder than before.
“Surely,” said I, “surely that is something at my window lattice;
Let me see, then, what the threat is, and this mystery explore—
I let my mind stop just a moment and this mystery explore;—
’Tis only Santa, nothing more!”

Santa saved us from our ruing, distracted us from all our stewing
Christmas tree our nightly viewing, ‘minding us of days of yore;
Now we pray for all united, keeping spirits undivided;
Wishing peace and love re-invited, mistletoe above your door—
Christmas prayers we do implore for elves and wizards, Dumbledore—
And Harry Potter, ever more!

(c) 2016 Randall P Ellis

Facts about Tom Price, HHS nominee

Health economists and every concerned citizen should disseminate the facts in this NEJM article about Donald Trump’s nominee of Tom Price to be the next secretary of HHS.
Coauthor Richard Frank is also a BU Ph.D. alum!

Randy Ellis


Care for the Vulnerable vs. Cash for the Powerful — Trump’s Pick for HHS

Sherry A. Glied, Ph.D., and Richard G. Frank, Ph.D.

New England Journal of Medicine

December 21, 2016DOI: 10.1056/NEJMp1615714


Since there is no abstract, here are the first two paragraphs.

Representative Tom Price of Georgia, an orthopedic surgeon, will be President-elect Donald Trump’s nominee for secretary of health and human services (HHS). In the 63-year history of the HHS Department and its predecessor, the Department of Health, Education, and Welfare, only two previous secretaries have been physicians. Otis Bowen, President Ronald Reagan’s second HHS secretary, engineered the first major expansion of Medicare, championed comparative effectiveness research and, with Surgeon General C. Everett Koop, led the fight against HIV–AIDS.1 Louis Sullivan, HHS secretary under President George H.W. Bush, focused his attention on care for vulnerable populations, campaigned against tobacco use, led the development of federally sponsored clinical guidelines,2 and introduced President Bush’s health insurance plan, which incorporated income-related tax credits3 and a system of risk adjustment. In their work at HHS, both men, serving in Republican administrations, drew on a long tradition of physicians as advocates for the most vulnerable, defenders of public health, and enthusiastic proponents of scientific approaches to clinical care.

Tom Price represents a different tradition. Ostensibly, he emphasizes the importance of making our health care system “more responsive and affordable to meet the needs of America’s patients and those who care for them.”4 But as compared with his predecessors’ actions, Price’s record demonstrates less concern for the sick, the poor, and the health of the public and much greater concern for the economic well-being of their physician caregivers.

Since the NEJM full article  requires a subscription, here is a summary what they document:

Price has sponsored legislation that

  • supports making armor-piercing bullets more accessible
  • opposes regulations on cigars
  • Repeals and replaces the ACA (see details below)


  • Against the Affordable Care Act (ACA)
  • Against regulating tobacco as a drug
  • Against the Domenici–Wellstone Mental Health Parity and Addiction Equity Act
  • Against funding for combating AIDS, malaria, and tuberculosis
  • Against expansion of the State Children’s Health Insurance Program
  • In favor of allowing hospitals to turn away Medicaid and Medicare patients seeking nonemergency care if they could not afford copayments
  • Against reauthorization of the Violence Against Women Act
  • Against legislation prohibiting job discrimination against lesbian, gay, bisexual, and transgender (LGBT) people
  • Against enforcement of laws against anti-LGBT hate crimes.
  • Against expanding the NIH budget
  • Against the recently enacted 21st Century Cures Act

Price stated views:

  • Favors converting Medicare to a premium-support system
  • Favors changing the structure of Medicaid to a block grant program
  • Favors amending the Constitution to outlaw same-sex marriage
  • Opposes stem-cell research
  • Inconsistent in supporting investments in biomedical science.

His proposal for repealing and replacing the ACA is H.R. 2300, the Empowering Patients First Act,5 which would

  • Eliminate the ACA’s Medicaid expansion and
  • Replace ACA subsidies with flat tax credits based on age, not income
  • Be regressive, with larger subsidies for high than low incomes.
  • Credits would pay only about one third of the premium of a low-cost plan
  • Credits proposed are smaller than those proposed by President Bush in 1992, and will not be sufficient to get most people to buy health insurance
  • Eliminate the guaranteed-issue and community-rating requirements in the ACA, with ineffective substitutes.
  • Withdraw almost all the ACA’s federal consumer-protection regulations, including limits on insurer profits and requirements that plans cover essential health benefits.
  • Allow the sale of health insurance across state lines, effectively eliminating all state regulation of health insurance plans
  • Fund his plan by capping the tax exclusion for employer-sponsored health insurance at $8,000 per individual or $20,000 per family, caps that are lower than the unpopular Cadillac tax in the ACA, which Price himself has voted to repeal, and hence is unlikely to ever be approved
  • Directly advance physicians’ economic interests by permitting them to bill Medicare patients for amounts above those covered by the Medicare fee schedule and allowing them to join together and negotiate with insurance carriers without violating antitrust statutes.
  • Oppose strategies for value-based purchasing and guideline development,
  • Oppose the use of bundled payments for lower-extremity joint replacements and
  • Propose that physician specialty societies hold veto power over the release of comparative effectiveness findings.

Consider what you can do to make sure that these facts are widely known. Perhaps ask your legislators which of these views they support.