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1. Optimal Contracting with Altruistic Agents: A Structural Model of Medicare Payments for Dialysis Drugs

Author:
Martin Gaynor, Nirav Mehta, and Seth Richards-Shubik
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
We study physician agency and optimal payment policy in the context of an expensive medication used in dialysis care. Using Medicare claims data we estimate a structural model of treatment decisions, in which physicians differ in their altruism and marginal costs, and this heterogeneity is unobservable to the government. In a novel application of nonlinear pricing methods, we theoretically characterize the optimal unrestricted contract in this screening environment with multidimensional heterogeneity. We combine these results with the estimated model to construct the optimal contract and simulate counterfactual outcomes. The optimal contract is a flexible fee-for-service contract, which pays for reported treatments but uses variable marginal payments instead of constant reimbursement rates, resulting in substantial health improvements and reductions in costs. Our structural approach also yields important qualitative findings, such as rejecting the optimality of any linear contract, and may be employed more broadly to analyze a variety of applications.
Topic:
Economics, Government, Health, Health Care Policy, Human Capital, Productivity, and Medicare
Political Geography:
United States

2. Time-Use and Academic Peer Effects in College

Author:
Nirav Mehta, Ralph Stinebrickner, and Todd Stinebrickner
Publication Date:
06-2018
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
This paper examines academic peer effects in college. Unique new data from the Berea Panel Study allow us to focus on a mechanism wherein a student’s peers affect her achievement by changing her study effort. Although the potential relevance of this mechanism has been recognized, data limitations have made it difficult to provide direct evidence about its importance. We find that a student’s freshman grade point average is affected by the amount her peers studied in high school, suggesting the importance of this mechanism. Using time diary information, we confirm that college study time is actually being affected.
Topic:
Economics, Human Capital, Higher Education, Students, and Productivity
Political Geography:
Global Focus

3. Targeting the Wrong Teachers? Linking Measurement with Theory to Evaluate Teacher Incentive Schemes

Author:
Nirav Mehta
Publication Date:
03-2017
Content Type:
Working Paper
Institution:
Centre for Human Capital and Productivity (CHCP), Western University
Abstract:
Measurement is crucial to the implementation of output-based incentive schemes. This paper uses models to study the performance of teacher quality estimators that enter teacher incentive schemes. I model an administrator tasked with (i) categorizing teachers with respect to a cutoff, (ii) retaining teachers in a hidden type environment, and (iii) compensating teachers in a hidden action environment. The preferred estimator would be the same in each model and depends on the relationship between teacher quality and class size. I use data from Los Angeles to show that simple fixed effects would almost always outperform more popular empirical Bayes.
Topic:
Economics, Education, Human Capital, and Productivity
Political Geography:
United States