An important concern to the efficiency of public finance systems is that voters suffer from various “fiscal illusions” that can politicians can exploit to expand the public sector. This paper contributes evidence of this effect on a public finance system through the revenue elasticity hypothesis, which is a form of fiscal illusion in which voters confuse tax rates with tax burdens in the approval of public spending. The applied empirical setting is Virginia cities and counties from 2001 to 2011, where the timing of mass property reappraisals is exogenous but known to local policymakers in setting the annual budget.
By 2010, the average US state had passed 37 health insurance benefit mandates (laws requiring health insurance plans to cover certain additional services). Previous work has shown that these mandates likely increase health insurance premiums, which in turn could make it more costly for firms to compensate employees. Using 1996–2010 data from the Quarterly Census of Employment and Wages and a novel instrumental variables strategy, we show that there is limited evidence that mandates reduce employment. However, we find that mandates lead to a distortion in firm size, benefiting larger firms that are able to self-insure and thus exempt themselves from these state-level health insurance regulations. This distortion in firm size away from small businesses may lead to substantial decreases in productivity and economic growth.
As the baby boom generation begins to retire, fewer and fewer private-sector workers have traditional defined benefit pension plans, which usually pay lifetime annuity benefits. Instead, they have accumulated considerable assets in 401(k) plans and individual retirement accounts (IRAs) that have no particular method of payout. Federal government policy, which has regulated defined benefit plans heavily and mandated plan designs for distributions, has tread more lightly on defined contribution plans because of their historical secondary nature.
The true US debt is 16 times larger than what the government reports. Closing this fiscal gap with taxes alone would require a massive, immediate, and permanent tax increase on every American family. The burden grows with each year of congressional and presidential inaction, threatening future standards of living. How would such a tax hike affect individual American households? A new study published by the Mercatus Center at George Mason University details how much Americans would have to pay to actually close the true fiscal gap with tax increases.
The current legislative and regulatory processes may not adequately inform Congress about the scope and economic consequences of legislation. Even if Congress had such information, no mechanism exists to allow Congress to easily act upon it. The budget process permits Congress to monitor and fund programs based on fiscal impact information. These processes could be improved to provide more, better, and actionable information about legislative and regulatory actions, especially through a reform that we term “legislative impact accounting.”…
This paper argues that the sharing economy—through the use of the Internet and real time reputational feedback mechanisms—is providing a solution to the lemons problem that many regulators have spent decades attempting to overcome.
In this paper I explain how the Department of Health and Human Services has taken on a powerful coordinating role in the provision of health care as a result of the Patient Protection and Affordable Care Act. This paper analyzes the unfurling of that act using the Bootlegger–Baptist model of political economy. By tracing the development of the law and its effect on how health care is delivered, the analysis shows that economic interests became coordinated through the efforts of the White House and the central “televangelist” agency, the Department of Health and Human Services. This development will inevitably result in bureaucratic decisions replacing individuals’ choices as the agency takes on an increasingly active and interventionist role in how health care is provided.
A new study for the Mercatus Center at George Mason University shows that differences in these rules can have significant effects on policy. The study finds that states with separate taxing and spending committees spend less per capita than other states. Voters concerned about the growth of government may want to take a closer look at this phenomenon.
This paper argues that health advocates are too quick to blame consumers for the ineffectiveness of information disclosure policies. Using the NFP as an example, the paper shows that information disclosures are often poorly designed and fail to actually inform consumers. They often fail to account for how consumers perceive and interpret information or for the differences in their socioeconomic backgrounds. Thus, it may not be consumers’ behavioral biases but rather poor policy design and implementation that is responsible for the NFP’s ineffectiveness. Consequently, the paper argues that nutrition labels should follow smart disclosure principles, which emphasize information salience and usability.
We explain that the medical-vocational grid guidelines that are used to determine whether someone is disabled are an important part of the explanation for increased disability awards. The grid applies much looser standards for applicants as young as 45 and 50. We propose that age be eliminated as a deciding criterion, as well as language ability and education level. We also note that the guideline’s list of impairments is outdated and needs to reflect a modern workforce that has access to remedying medical technologies.
Rebounding after disasters like tsunamis, hurricanes, earthquakes, and floods can be daunting. Communities must have residents who can not only gain access to the resources that they need to rebuild but can overcome the collective action problem that characterizes post-disaster relief efforts.