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This book provides a massive amount of new research on several popular and less-examined topics pertaining to the relationship between economics and aging. Among the many themes explored in this volume, considerable attention is given to new research on retirement savings, the cost and efficiency of medical resources, and the predictors of health events. The volume begins with a discussion of the risks and merits of 401(k) plans. Subsequent chapters present recent analysis of the growth of Medicare costs; the different aspects of disability; and the evolution of health, wealth, and living arrangements over the life course. Keeping with the global tradition of previous volumes, the book also includes comparative studies on savings behavior in Italy, the Netherlands, and the United States; an examination of household savings among different age groups in Germany; and a chapter devoted to population aging and the plight of widows in India.

The long-term impact of globalization, outsourcing, and technological change on workers is increasingly being studied by economists. At the nexus of labor economics, industry studies, and industrial organization, this book presents new findings about these impacts by examining the interaction between the internal workings of businesses and outside influences from the market using data from countries around the globe. The result is enhanced insight into the dynamic interrelationship between firms and workers. The book examines the relationships between human resource practices and productivity, changing ownership and production methods, and expanding trade patterns and firm competitiveness.

Every day, in every sector of our economy, a business shuts down while another starts up, jobs are created while others are cut, and workers are hired while others are laid off. This constant flux, or turbulence, is a defining characteristic of our free market system, yet it mostly inspires angst about unemployment, loss of earnings, and the overall competitiveness of corporations. But is this endless cycle of fluctuation really so bad for America? Might something positive be going on in the economy as a result of it? In this work, three economists seek to answer these questions by exploring the real impact of volatility on American workers and businesses alike. According to the authors, while any number of events—shifts in consumer demand, changes in technology, mergers and acquisitions, or increased competition—can contribute to economic turbulence, our economy as a whole is, by and large, stronger for it, because these processes of creation and destruction make it more flexible and adaptable. The authors also acknowledge and document the adverse consequences of this turbulence on different groups of workers and firms, and discuss the resulting policy challenges. Basing their argument on an up-close look into the dealings and practices of five key industries—financial services, retail food services, trucking, semiconductors, and software—they demonstrate the positive effects of turbulence on career paths, employee earnings, and firm performance.

The electricity market has experienced enormous setbacks in delivering on the promise of deregulation. In theory, deregulating the electricity market would increase the efficiency of the industry by producing electricity at lower costs and passing those cost savings on to customers. As this book shows, successful deregulation is possible, although it is by no means a hands-off process-in fact, it requires a substantial amount of design and regulatory oversight. This book brings together experts from academia, government, and big business to discuss the lessons learned from experiences such as California's market meltdown as well as the ill-conceived policy choices that contributed to those failures. More importantly, the book that comprise the book offer a number of innovative prescriptions for the successful design of deregulated electricity markets, and provide a deliberation on the many risks and rewards of electricity deregulation.

The U.S. government is the world's largest financial institution, providing credit and assuming risk through diverse activities. But the potential cost and risk of these actions and obligations remain poorly understood and only partially measured. Government budgetary and financial accounting rules, which largely determine the information available to federal decision makers, have only just begun to address these issues. However, recently there has been a push to rethink how these programs are valued and accounted for, and some progress has been made in applying modern valuation methods—such as options pricing, risk-adjusted discount rates, and value at risk—to these types of obligation. This book contains new research, both empirical and methodological, on the measurement and management of these costs and risks. The analyses encompass a broad spectrum of federal programs, including housing, catastrophe insurance, student loans, social security, and environmental liabilities. Collectively, the chapters here demonstrate that the logic of financial economics can be a useful tool for studying a range of federal activities.

National statistical agencies keep good track of how medical care dollars are spent—how much is paid to hospitals, physicians’ offices, pharmaceutical companies, and the like. However, it has proven much more challenging to measure the productivity of those dollars. What is medical care doing for our health? Given the large size of the US health care sector—roughly $3 trillion annually—measuring medical care productivity is essential in understanding what we get for our medical care dollars and in evaluating productivity growth in the economy as a whole. The National Bureau of Economic Research/Conference on Research in Income and Wealth last published a volume devoted to medical care accounting in 2001 (Cutler and Berndt, eds., “Medical Care Output and Productivity”). That volume brought to the forefront issues of productivity assessment in medicine. In the past 15 years, much has happened in the US health sector and in the ability to evaluate medical care productivity. This present volume thus returns to these themes. We report on methodological issues in measuring health care costs and outcomes, describe analyses of populations and market segments, explore prescription pharmaceutical markets in detail, consider issues in industrial organization and market design, and conclude with chapters on the “benefit incidence” of US public spending on medical care and the relationship between medical R&D and health improvement.

As the accelerated technological advances of the past two decades continue to reshape the United States' economy, intangible assets and high-technology investments are taking larger roles. These developments have raised a number of concerns, such as: how do we measure intangible assets? Are we accurately appraising newer, high-technology capital? The answers to these questions have broad implications for the assessment of the economy's growth over the long term, for the pace of technological advancement in the economy, and for estimates of the nation's wealth. This book offers new approaches for measuring capital in an economy that is increasingly dominated by high-technology capital and intangible assets. As the chapters show, high-tech capital and intangible assets affect the economy in ways that are notoriously difficult to appraise. In this detailed analysis of the problem and its solutions, the chapters study the nature of these relationships and provide guidance as to what factors should be included in calculations of different types of capital for economists, policymakers, and the financial and accounting communities alike.

The contribution of entrepreneurial businesses to economic growth is a frequently debated topic among the academic and policy-making communities and the subject of much discussion in the business and popular press. This debate stems from the enormous heterogeneity across entrepreneurs. A small share of entrepreneurs exhibit high growth and contribute substantially to job creation, innovation and productivity growth. However, the vast majority either fails or doesn’t grow. For both measurement and conceptual reasons, this heterogeneity is not well understood. Understanding this heterogeneity requires tracking the career paths of entrepreneurs including the differences in socio-economic circumstances across entrepreneurs. It also requires studying the obstacles and challenges facing entrepreneurs such as the difficulties of starting up businesses and obtaining financing. To complicate matters further entrepreneurs operate in a constantly changing economic and technological environment. This volume explores these issues from a number of different perspectives. A common theme is the need for improved economics measurement of entrepreneurial activity. Chapters in this volume take stock of our existing knowledge and data infrastructure on measuring entrepreneurial activity and offer insights and perspective on how to make improvements in the future. The chapters fit into three broad themes but with substantial overlap especially given the focus on economics measurement. The first broad theme is to explore entrepreneurial heterogeneity. The second broad theme is the challenges that entrepreneurs face and how this has varied over time including over the business cycle. The third broad theme focuses on core data and measurement issues and gaps.

In 1998, health expenditures in the United States accounted for 12.9 percent of national income—the highest share of income devoted to health in the developed world. The United States also spends more on medical research than any other country—in 2000, the federal government dedicated $18.4 billion to it, compared with only $3.7 billion for the entire European Union. In this book, health economists ask whether we are getting our money's worth. From an economic perspective, they find, the answer is a resounding “yes”: in fact, considering the extraordinary value of improvements to health, we may even be spending too little on medical research. The evidence these chapters present and the conclusions they reach are surprising: that growth in longevity since 1950 has been as valuable as growth in all other forms of consumption combined; that medical advances producing 10 percent reductions in mortality from cancer and heart disease alone would add roughly $10 trillion—a year's GDP—to the national wealth; and that the average new drug approved by the FDA yields benefits worth many times its cost of development. The chapters in this book are packed with these and many other revelations, their analysis demonstrating the massive economic benefits we can gain from investments in medical research.

Surely everyone wants to know the source of happiness, and indeed, economists and social scientists are increasingly interested in the study and effects of subjective well-being. Putting forward a rigorous method and new data for measuring, comparing, and analyzing the relationship between well-being and the way people spend their time—across countries, demographic groups, and history—this book aims to help set the agenda of research and policy for decades to come. It does so by introducing a system of National Time Accounting (NTA), which relies on individuals' own evaluations of their emotional experiences during various uses of time, a distinct departure from subjective measures such as life satisfaction and objective measures such as the Gross Domestic Product. The chapters here summarize the NTA method, provide illustrative findings about well-being based on NTA, and subject the approach to a rigorous conceptual and methodological critique that advances the field.

With the United States and other developed nations spending as much as 14 percent of their GDP on medical care, economists and policy analysts are asking what these countries are getting in return. Yet it remains frustrating and difficult to measure the productivity of the medical care service industries. This volume takes aim at that problem, while taking stock of where we are in our attempts to solve it. Much of this analysis focuses on the capacity to measure the value of technological change and other health care innovations. A key finding suggests that growth in health care spending has coincided with an increase in products and services that together reduce mortality rates and promote additional health gains. Concerns over the apparent increase in unit prices of medical care may thus understate positive impacts on consumer welfare. When appropriately adjusted for such quality improvements, health care prices may actually have fallen. This volume not only clarifies one of the more nebulous issues in health care analysis, but in so doing addresses an area of pressing public policy concern.

The productivity slowdown of the 1970s and 1980s and the resumption of productivity growth in the 1990s have provoked controversy among policymakers and researchers. Economists have been forced to reexamine fundamental questions of measurement technique. Some researchers argue that econometric approaches to productivity measurement usefully address shortcomings of the dominant index number techniques while others maintain that current productivity statistics underreport damage to the environment. This book proposes approaches to these issues. The result is an exposition of contemporary productivity analysis.

Spurred by the advances in option theory that have been remaking financial and economic scholarship over the past thirty years, a revolution is taking shape in the way legal scholars conceptualize property and the way it is protected by the law. This book explores how option theory is overthrowing many accepted wisdoms and producing tangible new tools for courts in deciding cases. It identifies flaws in the current system and shows how option theory can radically expand and improve the ways that lawmakers structure legal entitlements. It shows that an option-based system gives parties the option to purchase—or the option to sell—the relevant legal entitlement. Choosing to exercise a legal option forces decisionmakers to reveal information about their own valuation of the entitlement. And, as with auctions, entitlements in option-based law naturally flow to those who value them the most. Seeing legal entitlements through this lens suggests a variety of new entitlement structures from which lawmakers might choose. The book provides a theory for determining which structure is likely to be most effective in harnessing parties' private information. It proposes a practical approach to the foundational question of how to allocate and protect legal rights.

The report of the National Research Council Panel on Conceptual, Measurement, and Other Statistical Issues in Developing Cost-of-Living Indexes (COLI) addresses all the fundamental issues in consumer price measurement. The authors compare hedonic and matched-model indexes for apparel prices in the United States using Sears catalogue data over the period 1914–1993, and compare the resulting indexes with the corresponding Bureau of Labor Statistics apparel index over the same period. This book provides a brief detail of the COLI concept, quality change and new goods, and index scope. The Consumer Price Index (CPI) is constructed in part using a Laspeyres-type fixed weight index formula that does not reflect the potential for consumer substitution in response to relative price changes. The COLI approach to CPI index construction is superior to either the Cost-of-Goods Index or test approaches, but it should be noted that the test approach can be useful on occasion as a supplement to the economic approach to index construction. Thus, the book provides a discussion of how the new manuals tried to present reasonable principles rather than specific rules. These manuals also tried to harmonize their contents so that they would not contradict each other.

In the aftermath of the recent financial crisis, the federal government has pursued significant regulatory reforms, including proposals to measure and monitor systemic risk. However, there is much debate about how this might be accomplished quantitatively and objectively—and whether this is even possible. A key issue is determining the appropriate trade-offs between risk and reward from a policy and social welfare perspective given the potential negative impact of crises. This book addresses the challenges of measuring statistical risk from a system-wide perspective. It looks at the means of measuring systemic risk and explores alternative approaches. Among the topics discussed are the challenges of tying regulations to specific quantitative measures, the effects of learning and adaptation on the evolution of the market, and the distinction between the shocks that start a crisis and the mechanisms that enable it to grow.

Every time you buy a can of tuna or a new television, its bar code is scanned to record its price and other information. These “scanner data” offer a number of attractive features for economists and statisticians, because they are collected continuously, are available quickly, and record prices for all items sold, not just a statistical sample. But scanner data also present a number of difficulties for current statistical systems. This book assesses both the promise and the challenges of using scanner data to produce economic statistics. Three chapters in this book present the results of work in progress at statistical agencies in the U.S., United Kingdom, and Canada, including a project at the U.S. Bureau of Labor Statistics to investigate the feasibility of incorporating scanner data into the monthly Consumer Price Index. Other chapters demonstrate the enormous potential of using scanner data to test economic theories and estimate the parameters of economic models, and provide solutions for some of the problems that arise when using scanner data, such as dealing with missing data.

Beginning in the early 2000s, there was an upsurge of national concern over the state of the science and engineering job market that sparked a plethora of studies, commission reports, and a presidential initiative, all stressing the importance of maintaining American competitiveness in these fields. This book provides an academic study to probe the issues that underlie these concerns. This volume provides new information on the economics of the postgraduate science and engineering job market, addressing such topics as the factors that determine the supply of PhDs, the career paths they follow after graduation, and the creation and use of knowledge as it is reflected by the amount of papers and patents produced. Chapters also explore the tensions between industry and academe in recruiting graduates, the influx of foreign-born doctorates, and the success of female doctorates. The book raises new questions about stimulating innovation and growth in the American economy.

From the traditional craft hiring hall to the Web site Monster.com, a multitude of institutions exist to facilitate the matching of workers with firms. The diversity of such Labor Market Intermediaries (LMIs) encompasses criminal records providers, public employment offices, labor unions, temporary help agencies, and centralized medical residency matches. This book analyzes how these third-party actors intercede where workers and firms meet, thereby aiding, impeding, and, in some cases, exploiting the matching process. By building a conceptual foundation for analyzing the roles that these understudied economic actors serve in the labor market, this book develops both a qualitative and quantitative sense of their significance to market operation and worker welfare. Cross-national in scope, this book coalesces research on a set of market institutions that are typically treated as isolated entities, thus setting a research agenda for analyzing the changing shape of employment in an era of rapid globalization and technological change.