Randall Lutter

Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation

We focus on the effect of state versus private ownership on the rates of firm-specific productivity growth and cost decline by developing a model of endogenous, firm-specific productivity growth and testing its implications against panel data on 23 international airlines of varying levels of state ownership over the period 1973-83. Our model and empirical results show that state ownership can lower the long-run annual rate of productivity growth or cost decline, but not necessarily their levels in the short run. Observed level differences in productive efficiency across private and state-owned firms may thus be a function of the age distribution of the firms being compared. These results appear to be independent of whether the firms operate under apparently more or less competitive or regulated markets and whether they differ in production scales. The analysis offers new insights concerning the recent trend toward privatizing state-owned enterprises that has been observed in many countries.

Health-Health Analysis: A New Way to Evaluate Health and Safety Regulation

Regulations to promote health and safety that are exceptionally costly relative to the expected health benefits may actually worsen health and safety, since compliance reduces other spending, including private spending on health and safety. Past studies relating income and mortality give estimates of the income loss that induces one death — a value that we call willingness-to-spend (WTS)-to be around

Fetal and Early Childhood Undernutrition, Mortality, and Lifelong Health:

9 to

Healthcare impact of personalized medicine using genetic testing: an exploratory analysis for warfarin

12 million. Such estimates help identify regulations that do not improve health and safety, and moreover, fail benefit-cost comparisons. WTS is a multiple of the willingness to pay to avert a statistical death. International data yield estimates of WTS and willingness-to-pay in different countries.

Mercury in the Environment: A Volatile Problem

Child undernutrition is a major public health challenge, estimated to be responsible for 2.2 million annual deaths. Implementation of available interventions could prevent one-third of these deaths. Emerging evidence suggests that breast-feeding can lead to improvements in intelligence quotient in children and lower risks of noncommunicable diseases in mothers and children decades later. Nonetheless, breast-feeding and complementary feeding practices differ greatly from global recommendations. Although the World Health Organization recommends that infants receive solely breast milk for the first 6 months of life, only about one-third of infants in low-income countries meet this goal, just one-third of children 6 to 24 months old in low-income countries meet the minimum criteria for dietary diversity, and only one in five who are breast-fed receive a minimum acceptable diet. Although the potential effects of improved breast-feeding and complementary feeding appear large, funding for research and greater use of existing effective interventions seems low compared with other life-saving child health interventions.

Do Federal Regulations Reduce Mortality

Warfarin, an anticoagulant commonly used to prevent and control blood clots, is complicated to use because the optimal dose varies greatly among patients. If the dose is too high, the risk of serious bleeding increases; if the dose is too low, the risk of stroke increases. We estimate the potential health benefits and resulting changes in healthcare costs should it become feasible to base personalized warfarin dosing decisions on appropriate genetic testing. Using different assumptions regarding the costs and effectiveness of genetic testing, we estimate that formally integrating genetic testing into routine warfarin therapy could allow American warfarin users to avoid 4500-22,000 serious bleeding events annually. Genetic-based therapy could also reduce the incidence of strokes among patients taking warfarin. We estimate that the additional cost per patient from integrating genetic testing into warfarin therapy could range from US

Improving Weight of Evidence Approaches to Chemical Evaluations

300 in our pessimistic case, to substantial healthcare cost savings in the optimistic case.

Tradable Permit Tariffs: How Local Air Pollution Affects Carbon Emissions Permit Trading

However, these different parties dis-agree about how mercury should be reg-ulated. The controversy is likely to growthrough December 2004, which is thedeadline for the U.S. EnvironmentalProtection Agency (EPA) to regulateemissions following the maximumachievable control technology (MACT)provisions of the Clean Air Act.

Social cost of carbon: Domestic duty

A minimal test of the desirability of regulations is that they further their primary objectives. In some cases, regulations designed to reduce health, safety, and environmental risks can actually increase risk, especially when such regulations lead to significant reductions in private expenditures on life-saving investments. This monograph assesses the mortality implications of the costs of a group of twenty-four federal health, safety, and environmental regulations. We find that an unintended increase in risk is likely to result from the majority of regulations examined here. A more positive result is that aggregate mortality risk falls for the entire set of regulations, primarily because a few regulations yield large reductions in risk. We believe that such analysis can help to highlight the potential problems with inefficient regulation and can serve as a useful complement to other forms of analysis, such as benefit-cost analysis. Specifically, we believe that an assessment of the mortality implications of regulatory costs can and should be used to help identify those regulations whose primary purpose is to save lives but that may have the unintended consequence of actually increasing mortality. In such perverse cases, Congress and the regulatory agencies should seriously consider alternatives that would yield higher levels of economic welfare and save more lives.

Uncertain Benefits Estimates for Reductions in Fine Particle Concentrations

Federal and other regulatory agencies often use or claim to use a weight of evidence (WoE) approach in chemical evaluation. Their approaches to the use of WoE, however, differ significantly, rely heavily on subjective professional judgment, and merit improvement. We review uses of WoE approaches in key articles in the peer-reviewed scientific literature, and find significant variations. We find that a hypothesis-based WoE approach, developed by Lorenz Rhomberg et al., can provide a stronger scientific basis for chemical assessment while improving transparency and preserving the appropriate scope of professional judgment. Their approach, while still evolving, relies on the explicit specification of the hypothesized basis for using the information at hand to infer the ability of an agent to cause human health impacts or, more broadly, affect other endpoints of concern. We describe and endorse such a hypothesis-based WoE approach to chemical evaluation.