Richard Dusansky

Technical Efficiency in the Decentralized Care of the Developmentally Disabled

This paper analyzes the technical efficiency of group home care for the developmentally disabled in the Detroit metropolitan area. Linear programming methods are used to construct a production frontier that allows measurement of relative technical efficiency among homes in the sample. A sensitivity analysis is performed to identify influential observations in the data that might result from measurement error that could distort the efficiency measures. A regression analysis is undertaken to examine the effect of various factors on measured efficiency. Policy implications are discussed in the concluding section. Copyright 1994 by MIT Press.

On the relative efficiency of alternative modes of producing a public sector output: The case of the developmentally disabled

Abstract This paper examines the relative efficiency of alternative methods of producing care for the developmentally disabled. A linear programming framework is used to construct a production frontier which allows measurement of relative efficiency among institutions in the sample. Tests are performed to detect influential observations in the data which might result from measurement error which could distort the efficiency measures. Different types of institutions are compared in terms of average efficiency. Policy implications of the analysis are discussed in the concluding section.

Implications of the Interaction Between Insurance Choice and Medical Care Demand

The gross price elasticity of demand for medical care is decomposed into two separate observable components: the medical care gross price elasticity of insurance choice and the cost‐sharing elasticity of medical care. When consumers alter their choice of health‐care plans, the price elasticity of medical care is no longer equivalent to the cost‐sharing elasticity; using the latter as a proxy for the former may produce misleading results. We present conditions under which the medical care price elasticity is positive, the case of a quasi‐Giffen good, and provide a theoretical foundation for extant empirical findings of a positive medical care price elasticity of insurance demand.

Separability, Welfare Economics and the Theory of Second Best

This paper reconsiders the Lipsey-Lancaster [4] theory of second best and formulates less restrictive sufficient conditions for the preservation of the usual first-order conditions for the non-deviant commodities. In particular, we derive a more general class of separable objective and constraint functions which yield the result that, even in the presence of a Lipsey-Lancaster constraint for deviant commodities, the usual Paretian optimum conditions for the non-deviants continue to be optimal. Consider the maximization problem: max F(x1, ..., xn)

On the Economics of Institutional Care of the Elderly in the U.S.: The Effects of a Change in Government Reimbursement

We present an optimization model of a nursing home which incorporates the following characteristics: proprietary profit maximization, the distinction between private and Medicaid patients, non-essential expenditure aimed at market identification, and cost-based government reimbursement. The model is used to analyze the effect of changes in government reimbursement. The theoretical analysis indicates that increases in government reimbursement need not lead to increases in non-essential cost expenditures and private patient charges; in fact the contrary may result. The econometric analysis suggests empirical support for the latter. Higher reimbursement factors are associated with lower charges.

On increasing the supply of nurses: An interstate analysis

During a period in which the health care system is undergoing a great deal of change and is subject to shifts in policy, it is necessary to understand the workings of each of its markets. In this paper the nursing market is analyzed. Among the studies in the literature on this subject is that of Benham [1971], whose work has been extended in this research. Benham used state-aggregated data for 1950 and 1960 to estimate a three equation model of supply and demand for registered nurses (RNs). Equations for RN wage, RN stock, and RN labor force participation rate were estimated. The model presented here is extended to include licensed practical nurses (LPNs) who are an important substitute for registered nurses in most practice environments. In addition, the participation rate equations, which have 0-1 range dependent variables, are estimated using the logit transformation. Because the duties, as opposed to training, of the two groups of nurses overlap greatly, simultaneous treatment of the two markets is important. The reaction of each in response to policy changes will determine outcomes. In regulation of the nursing market, especially as it relates to concerns about ameliorating nurse shortages, there are three policy alternatives generally given consideration. The first is to provide nursing educational subsidies that will increase the output of new nurses. The expectation is that nurse stocks will rise and, for a given participation rate, nurse labor supply will increase.

Externalities, Welfare, and the Feasibility of Corrective Taxes

The Pigouvian prescription of utilizing corrective taxes and subsidies in cases of technological externalities has become a common, if not traditional, policy recommendation of the applied welfare economist. Given externalities, it is considered appropriate to tax the firm (or industry) generating a technological diseconomy (by producing too much) and subsidize the firm responsible for a technological economy (by producing too little), to induce them to produce socially desirable (that is, socialwelfare-maximizing) quantities. While there is little question of the theoretical justification for this policy prescription, the issue of its operationality does raise some doubts. It is known, for example, that under certain conditions the existence of specific kinds of cost functions makes implementation infeasible, while others make for no difficulty (see Davis and Whinston 1962). Of considerable importance, then, to the general applicability and usefulness of Pigouvian corrective tax policy, is a characterization of the set of cost functions for which this policy is feasible. In this paper we specify this set and show that it contains a very general class of cost functions. Furthermore, we demonstrate that this set is far larger than had been thought and, hence, that policy makers may make use of corrective tax-subsidy schemes in a much larger number of situations.

Government subsidy of critical-need occupations: the case of nurses.

This paper undertakes an econometric evaluation of governmental policies aimed at increasing the labor force supply of nurses and at effecting greater hospital substitution among auxilliary health personnel, in times of nurse shortage. The methodology is to employ a simultaneous equation, multi-nurse econometric model which is estimated by a three-stage least-squares procedure incorporating use of logit transformation to deal with limited dependent variables and use of weighted least squares to deal with heteroskedasticity.

The true shadow price of foreign exchange

For the last half century, trade theorists, development economists, and development practitioners have been calculating what was claimed to be the shadow price of scarce foreign exchange. In fact, what they have been calculating is the social value of the receipt of a unit of a numeraire good from abroad, typically obtained from real models. In our paper, we explicitly deal with a model of a monetized economy, and we develop formulas for the social value of a unit of foreign currency, which, in general, differ from the traditional formulas.

Estimating the economic impacts of public spending in a sub-region: An econometric approach

Abstract Expenditures on a public institution represent not only a cost to the taxpayer but an economic benefit to the region in which it is located. The economic impact on a regions income is here calculated through an econometric model and associated multipliers. The impact on government income tax recepits is similarly calculated. The tax revenues are also used in determining the net cost of operation of the institution. These calculations are performed for the expenditures associated with the new State University Hospital at Stony Brook, N.Y. located in the region formed by Nassau and Suffolk Countries. The regional income multiplier is found to be 1.64.