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Publications (203)
This paper provides a historical review of the evolving roles of colleges and universities in the U.S. economy, with a specific focus on how higher education activities and performance objectives have evolved, and constituencies have expanded over time, driven in large part by national-level policies and federal programs. This includes a wide span...
Colleges and universities-both state institutions and private institutions-depend on revenue from students and their families (tuition), donors, public agencies, and grant sponsors for their economic health and existence. They compete for those funds based in large part on information concerning their performance, in education, research, sports, po...
The operations of heath care programs and organizations today rely heavily on the measurement of performance and outcomes. This includes a variety of stakeholders-private firms such as pharmaceutical manufacturers, government health care providers and insurers including Veterans Administration (VA) hospitals, and private hospices that depend on the...
While the specific application of standardized performance testing for students has been debated over the years, the concept continues as a means of monitoring and encouraging better K-12 education. And yet, there remains a need to consider broader public policy issues of how incentives and undesired distortions occur, and what can be done to ameli...
This paper explores the ways that many public programs incorporate well-intentioned funding and revenue incentives designed to improve service delivery, which unfortunately end up being undermined by “gaming” on the part of recipients. This result is sometimes illegal and sometimes not, but it is always economically inefficient and hence undesirabl...
Non-profit organizations are hybrids – private but with restricted ownership rights. This defining ‘nondistribution constraint’ reduces incentives to exploit underinformed customers and allows non-profits to depart from profit-maximizing behaviour, although costly enforcement of this constraint limits effectiveness. Non-profits’ GDP share in the Un...
Economic theory ascribes the primary role in the provision of public goods to government. This emphasis on government overlooks the role of the not-for-profit sector in providing collective-type goods. In this paper we seek to determine the factors influencing charitable contributions to private nonprofit organizations by estimating a demand functi...
Mission and Money goes beyond the common focus on elite universities and examines the entire higher education industry, including the rapidly growing for-profit schools. The sector includes research universities, four-year colleges, two-year schools, and non-degree-granting career academies. Many institutions pursue mission-related activities that...
The article discusses the fiscal problems in higher education in the U.S. It outlines the causes of the financial crisis experienced by higher education including endowments' stock market losses, tightened credit, and revenue losses from school tuition, state funding, and donations. It mentions that in the declining economy, states are cutting fund...
When nonprofit organizations in the U.S. engage in activities that are "substantially related" to their legal mission they pay no profits taxation, but profit from "unrelated business" (UB) activities is taxed. Since UB activity has no apparent justification other than to generate revenue, we attempt to explain why no profit is so frequently report...
Many academic institutions pursue mission-related activities that are unprofitable and engage in profitable revenue raising activities to finance them. This book presents research on schools’ revenue sources from tuition, donations, research, patents, endowments, and other activities. It considers lobbying, distance education, and the world marke...
We study how for-profit and religious nonprofit hospices respond to an exogenous Medicare reimbursement incentive that encourages maximization of patient length of stay. Hospices have the incentive to selectively admit patients with longer expected lengths of stay, and admit patients sooner after a hospital discharge. We find that for-profit hospic...
Political systems may respond not only to elections but also to expressions of dissatisfaction through complaints and geographic mobility. Understanding the implications of citizen dissatisfaction with local public services is the goal of this article, which examines empirically two forms of consequences of dissatisfaction—complaints to governmenta...
The Nader case highlights the related problems of airline “overbooking” and passenger “no shows,” and raises the question of what public policy should be in this area. The paper analyzes the efficiency and equity aspects of Nader's attempt to eliminate overbooking. It also focuses attention on the interplay of litigation and regulation as instrumen...
We characterize the patterns of pricing and rationing when paternalistic nonprofit organizations (either private or governmental) care about the level and distribution of consumer surplus provided to their clients. Equilibrium depends upon marginal cost, the organization's distributional weights, exogenous income levels, and cream-skimming by compe...
Since the 19th century, the Young Men's Christian Association (YMCA) has morphed into a health-and-fîtness Goliath. In 2001, this tax-exempt organization had revenues of $4.1 billion, making it the largest nonprofit, in terms of earned income, in the United States. Today, many of the more than 2,400 local Y's in the country boast basketball courts,...
Studies of mixed industries frequently focus on differential behavior between for-profit and either nonprofit or governmental producers. Substantially less is known about differences among governmental, religious nonprofit, and secular nonprofit organizations. We examine the compensation of hospital CEOs to assess the extent to which these three or...
This chapter examines the behavior of two forms of nonprofit organizations: religious nonprofit and secular nonprofit, as well as that of private for-profit (FP) firms, when they coexist in a mixed industry: hospitals. In an attempt to determine whether each type of nonprofit organization can be characterized by the same objective function as a for...
Volunteer labor is generally analyzed as a homogeneous activity, implying that the marginal effects of tax changes and demographic shifts are equal across industries and forms of volunteering. Here the homogeneity assumption is tested by estimating and comparing volunteer labor supply functions in three sectors that rely on volunteer labor—health,...
The nonprofit sector is growing rapidly. The number of nonprofit organizations has tripled, from 309,000 in 1967, to nearly one million today Total revenues, less than 6 percent of the gross national product in 1975, exceeded 10 percent in 1990 (Herman, 1995). Between 1980 and 1990, the number of employees paid by nonprofits grew by 41 percent, mor...
In what ways, if any, does the behavior of government and nonprofit organizations differ? This paper examines evidence from two industries‹nursing homes and mentally handicapped facilities‹to determine whether government and nonprofit organization behavior differs in identifiable dimensions, and if it does, why the differences occur. Behavior is st...
We estimate the responsiveness of donations to a number of economic variables, including price, advertising, and the availability of revenue from such other sources as government grants and program service sales. Utilizing a set of IRS data on individual nonprofit organizations in each of seven industries — including hospitals and higher education...
Differential economic behavior of for-profit and nonprofit institutions can be manifest in both output and input markets. When behavior in output markets is difficult to observe, behavior in input markets can be useful proxies. We examine monetary compensation and its composition between base salary and bonus, and the associated incentive structure...
The incentives facing health care research and development (R&D) are influenced by the ambiguous signals sent by private and public insurance decisions affecting the use of, and payments for, existing technologies. Increasingly, that uncertainty is exacerbated by confusion over technologies' impact on health care costs, how costs are to be measured...
In many industries, such as higher education, hospitals, and museums, nonprofit organizations control great wealth. Public and private donations, tax subsidies, and volunteered services have typically made that wealth accumulation possible. In return for the various forms of assistance, nonprofits are subject to the "nondistribution constraint" - t...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from...
Excerpt from introduction: The idea of commercialism in the nonprofit sector sounds to some people like a paradox: Nonprofits are supposed to be essentially different from private firms for whom commercialism is their very lifeblood. To others, though, the uniqueness of nonprofit organizations is by no means self-evident; perhaps they are really no...
If to behave commercially is to act like a for-profit firm, then the ultimate expression of commercialism for a nonprofit is to convert its legal status to the for-profit form. Conversion is increasingly common, most notably in health care, and is now attracting considerable public attention. Some observers believe that nonprofits and for-profits i...
The effects of the favorable tax treatment of nonprofit commercial activities are best understood in a framework which explicitly accounts for the interaction between differential taxation and the preferences of nonprofit executives who may be averse to commercial activity, donors whose giving may be sensitive to NPO commercial activity, and cost c...
The conversion of a nonprofit firm to the for-profit form is commercialism carried to an extreme. Conversion is increasingly common, most notably in health cave. We seek to advance understanding of why nonprofit conversions occur and what public policy should be toward them. A transfer of control-the essence of a conversion-over nonprofit assets ca...
With a growing emphasis on cost containment, health care providers must increasingly consider costs whenever they adopt new technologies. This has implications for the kinds of technologies that medical R&D firms develop. We report the results of a survey of 58 medical R&D firms to determine how, if at all, medical research portfolios are changing....
The nonprofit sector-neither private enterprise nor governmental-is growing rapidly, and not only in the United States. This article explores three questions about the sector, which includes large elements of such service industries as universities, hospitals, nursing homes, day-care centers, museums, social services, and organizations promoting me...
"Public" radio and television are industries that illustrate well the interplay of outputs and mechanisms to finance them. The collective goods aspects of their broadcast outputs are unusually large; the process of production and distribution of programs is such that the incremental costs of serving additional listeners or viewers is essentially ze...
Complaints and geographic mobility--that is, "voice: and "exit"--are potential responses to "dissatisfaction" in the market for publicly provided municipal services, as in other markets. We find that reported dissatisfaction with public services can be used to predict both. Furthermore, complaining and mobility appear to be complementary, rather th...
Soaring costs have thrust health care into the political debate of every economically advanced country. The escalation of expenditures is being accompanied by increasing pressures on governments to confront what appears to be a dilemma -- either accepting the rising expenditures on health care, or restricting access to health care.This paper addres...
Little is known about the labor market for volunteers, but even less is known about the supply of volunteers to particular industries. This article examines the supply of volunteer labor to one industry, hospitals, and the choices that volunteers make among hospitals with different ownership attributes. Survey data of volunteers at four hospitals l...
This article examines the conceptually desirable attributes of a fully quality-adjusted prescription drug price index. It provides an understanding of how the Consumer Price Index for prescription drugs and medical supplies treats quality changes in prescription drugs and, in particular, quality changes associated with the introduction of new drugs...
Measuring "productivity" in the health care sector is unusually complex. While focusing on several traditional measures of "output" in the health sector, two more encompassing measures, i.e., the quality adjusted life year and the level of patient satisfaction, are also considered. It is also shown that measures designed to gauge productivity in th...
The role of private non-profit organisations in modern economic systems is poorly understood. The tax and subsidy treatment of non-profits relative to private firms affects the competitive position of each, and thus their relative strength within any industry; in the United States, for example, non-profit organisations play major competitive roles...
During the roughly four decades since the end of World War II, the health care system in the United States has experienced historically unprecedented change in three dimensions. First, new technologies have revolutionized the ways in which health care is capable of being practiced. Almost all of today's armamentarium of disease diagnosis and treatm...
The private nonprofit form of institutions is large and growing. Its role in a mixed economy is the subject of this article. Nonprofits differ from private enterprises primarily in the constraints on them. The key element is that nonprofits may not distribute profits to anyone associated with the organization, a restriction that is in sharp contras...
In 1987, 30 million people—one in every eight in the United States—was over 65. Forty years from now, that number will grow to more than 65 million, and more than one in every five Americans. As the population ages, the issue of long-term care of the elderly is certain to become a public policy question. Responding to the growing concern, the Cente...
Nitroglycerin and related nitrate agents are the most widely prescribed medications for angina pectoris, a chronic manifestation of coronary heart disease (CHD) that affects approximately 2 million persons in the United States [1]. While some nitroglycerin products are used to treat acute anginal attacks, others — notably, long-acting oral nitrates...
We model the supply of volunteer labor, which received an explicit wage of zero. Quantitatively important, it constituted over 5 percent of the entire labor supply in the United States in 1980. Both consumption and investment models are considered - the former positing volunteering as an ordinary consumer good, while the latter posits it as a means...
Variously termed voluntary, philanthropic and charitable, as well as non-profit – these organizations constitute a sizeable share of economic activity, particularly in the social services area, and they are of growing importance. Non-profit organizations contribute some four per cent of national income in the United States, up from three per cent i...
The article focuses on problems faced by American health-care industry. Current public policy efforts to contain costs are looking to increased competition as a solution, which is strange considering the difficulty consumers already have in judging the quality of health care, not to mention the fact that little is known about the outcome of competi...
When the government institutes a program thought to be useful for society as a whole, such as building a highway or controlling air pollution, those that benefit from such programs are usually quite different from those that bear its costs. Sometimes the government responds by postponing or modifying the program, sometimes by compensating those tha...
The expenditure consequences of the drug cimetidine for the period 1977-1979 are investigated. Using Medicaid data for the State of Michigan, it is found that expenditures for the first year of treatment of duodenal ulcers are reduced between 26% and 70%. The methodology employed can be applied to the assessment of other medical technologies.
The 1/n problem potentially limits the effectiveness of profit sharing in motivating workers. While the economic literature suggests that reciprocity can mitigate this problem, it remains silent on the optimal degree of reciprocity. We present a representative model demonstrating that reciprocity may increase productive effort but may also increase...
The study reported on here is the first benefit-cost analysis of a controlled (random assignment) experiment in the mental health field. It compares, in terms of an unusually wide variety of tangible and intangible forms of benefits and costs, a traditional, hospital-based approach to treating the mentally ill with a nontraditional community-based...
The objectives of this paper are to show: (1) why, and under what conditions economic evaluation of a new technology (health or other) may be useful; (2) what alternative evaluation approaches are available; (3) how those approaches have been applied to the case of one new technology, the drug cimetidine; and (4) what obstacles there are to improvi...
