Wednesday, May 2, 2012

The Economics Profession Actually Recognizes Real Research That Could Help Direct Policy –

Maybe There’s Hope for the Dismal Science After All

The economics profession declared itself a branch of applied mathematics a number of decades ago, and decided that its highest calling resulted in research so arcane, so useless and so incomprehensible that it could right take its place with other useless academic pursuits.  The idea of actually using economic theory, analysis and research to develop polices that might make the real world better was frowned upon,  being something beneath the dignity of true social scientists.

But there are signs economics is changing its focus, in part because right wing ideologues have so botched things up that the profession itself is in disrepute.  One sign was the awarding of the John Bates Clark prize for the outstanding economist under 40 to a person who engages in research that might some day benefit the country.

Dr. Finkelstein

Why is this woman smiling?
Because her research may actually lead
to better public policy!
Amy Finkelstein, a professor at the Massachusetts Institute of Technology, won the Clark medal, which is given each year to the nation's most promising economist under the age of 40. Ms. Finkelstein, 38, is only the third woman to ever win the award. The award is the profession's second-most prestigious honor after the Nobel Prize.

So what did Ms. Finkelstein do to earn this prestigious designation?

"She single-handedly got people excited about insurance markets again," said Justin Wolfers, an economist at the University of Pennsylvania's Wharton School. "Her findings overturned what we thought we knew."

Her most influential work has examined the social costs of failures in the market for health insurance.

One of the things she investigating was whether or not Medicaid was beneficial for the people who received it.  Now that is something most of us take as a given, but given the visceral opposition to the program by Conservatives, it would have been helpful to have some empirical evidence of its effectiveness.  And thanks to Ms. Finkelstein, we do.

In one recent experiment, she and other researchers tracked a group of low-income, uninsured adults in Oregon who were randomly picked to receive —or not receive—the opportunity to apply for public health insurance.

Because it was a randomized controlled trial, the experiment sidestepped common pitfalls that researchers examining the effects of insurance face, including the tendency of sicker people—or unusually healthy people—to seek insurance.

The finding: A year later, those selected by the lottery to apply for Medicaid were more likely to have Medicaid, used more health care, had lower out-of-pocket medical expenditures and reported better physical and mental health.

Okay, not a surprise except to those Conservatives who have argued Medicaid not only doesn’t help people but makes those it does try to help sicker.  Admittedly no amount of data and analysis will convince those Conservatives to change what they believe because those beliefs are based on faith, not facts or reason.  But at least it gives the rest us one more weapon in the arsenal to be used against mindless posturing.

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