Michael J. Moore’s research while affiliated with University of Virginia and other places

We analyze the effects on consumers of an extreme policy experiment -- Napsterizing' pharmaceuticals -- whereby all patent rights on branded prescription drugs are eliminated for both existing and future prescription drugs without compensation to the patent holders. The question of whether this policy maximizes consumer welfare cannot be resolved on an a priori basis due to an obvious tradeoff: While accelerating generic entry will yield substantial gains in consumer surplus associated with greater access to the current stock of pharmaceuticals, future consumers will be harmed by reducing the flow of new pharmaceuticals to the market. Our estimates of the consumer surpluses at stake are based on the stylized facts concerning how generic entry has affected prices, outputs, and market shares. We find that providing greater access to the current stock of prescription drugs yields large benefits to existing consumers. However, realizing those benefits has a substantially greater cost in terms of lost consumer benefits from reductions in the flow of new drugs. Specifically, the model yields the result that for every dollar in consumer benefit realized from providing greater access to the current stock, future consumers would be harmed at a rate of three dollars in present value terms from reduced future innovation. We obtain this result even accounting for the stylized fact that after generic entry branded drugs continue to earn significant price premia over generic products and hence recognizing that Napsterizing does not completely eliminate the incentives to innovate.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Informal caregivers of individuals with Alzheimer's disease spend a considerable amount of time providing care. In this paper, we use Grossman's health production and Becker's time allocation models to develop a model of informal care provision to elderly dementia patients. In our model, time inputs produce caregiving services, which provides utility to the caregiver, but reduces leisure. We assume that time is less productive of services on the margin as the disease progresses. In this framework, an increase in patients' disease severity does not necessarily increase informal caregiver time input. The cost of formal care establishes a reservation price for informal caregiving. When the costs of informal caregiving rise above this reservation level, the patient is institutionalized. We test empirically the effect of deterioration in the patients' condition, proxied by both disease severity and dementia problem behavior, on informal caregiving time. We find that dementia-related problem behaviors and functional limitations significantly increase inputs of informal caregiving time. Patients' problem behavior exerts a modifying effect on functional limitations, and patients' comorbidities have no effect on informal caregiving time. Copyright Kluwer Academic Publishers 2003

Economic research has contributed to the evaluation of alcohol policy through empirical analysis of the effects of alcohol-control measures on alcohol consumption and its consequences. It has also provided an accounting framework for defining and comparing costs and benefits of alcohol consumption and related policy interventions, including excise taxes. The most important finding from the economics literature is that consumers tend to drink less ethanol, and have fewer alcohol-related problems, when alcoholic beverage prices are increased or alcohol availability is restricted. That set of findings is relevant for policy purposes because alcohol abuse imposes large "external" costs on others. Important challenges remain, including developing a better understanding of the effects of drinking on labor-market productivity.

The purpose of the study was to examine on a national level the informal costs of caring for elderly community-dwelling male veterans with dementia by female caregivers and the relationships between informal costs and disease severity, and between informal costs and dementia problem behaviors. Female primary caregivers were drawn from the first wave (N = 2043) of the National Longitudinal Caregiver Study, a survey of informal caregivers of elderly male veterans diagnosed with probable Alzheimer's disease or vascular dementia. Cost measures include the following four items: value of caregiving time, caregiver's lost income, out-of-pocket expenditures for formal caregiving services, and caregiver's excess health costs. Disease severity was indexed by the number of impairments in activities of daily living. Patient's problem behaviors were measured using the Behavior Rating Scale-Dementia. The annual cost of providing informal care to elderly community-dwelling veterans with dementia was estimated to be $18,385 per patient in 1998. The larger components of this cost are caregiving time ($6,295) and caregiver's lost earnings ($10,709). All aspects of costs increase with disease severity and problem behavior. Most of this cost increase derives from the increased caregiving time required for the provision of physical care. This study provides a comprehensive estimate of the excess costs that result from providing informal dementia care in the community. Unlike previous studies, our estimates excluded costs that caregivers would have incurred if they had not been caregivers. Therefore, results reported here reflect only costs due to informal dementia care.

Excess drinking is associated with lost productivity, traumatic injury, early death, crime and violence, and neglect of family responsibilities. These and related concerns have long engendered public support for government regulation of the production, sale, and use of alcoholic beverages in the United States. Alcohol abuse by youths is a particular concern. Every state bans the sale of alcohol to those under age twenty-one. Despite this age-based prohibition, alcohol drinking is widespread among teenagers. The public response to youthful drinking includes efforts directed at both the demand for alcohol among and the supply of alcohol to young people. For the most part, the relevant economics literature has focused on supply-side interventions, especially the minimum purchase age (MPA) and alcohol excise taxes. This chapter examines the influence of the MPA and the beer excise tax on youthful drinking, using data from the National Longitudinal Survey of Youth (NLSY) for 1982–1985 and 1988–1989. While the chapter finds that the estimated effects of excise taxes are sensitive to specification, it shows that increasing these taxes would reduce the prevalence of binge drinking.

Firms routinely engage in public communications that are available to various constituencies. including competitors. In a laboratory experiment with prisoner's dilemma payoffs, the authors investigate the effect of one form of these communications-cheap talk signals. statements that are costless, nonbinding, and nonverifiable and do nor directly affect the payoffs for either party. The authors find that only competitors that perceive that they share goals for a joint. coordinated outcome correctly update their beliefs about their competitor's next move on the basis of cheap talk signals. The authors contend that the conditions for cheap talk to work may be so rare that cheap talk is more likely to fall on deaf ears than to result in collusion. The authors suggest implications for managers and public policymakers as well as areas for further research.

Excess drinking is associated with lost productivity, accidents, disability, early death, crime, neglect of family responsibilities, and personality deterioration. These and related concerns have justified special restrictions on alcoholic-beverage commerce and consumption. The nature and extent of government involvement in this arena vary widely over time and place, and are often controversial. Economists have contributed to the evaluation of alcohol policy through empirical work on the effects of alcohol-control measures on consumption and its consequences. Economics has also provided an accounting framework for defining and comparing costs and benefits of interventions, including excise taxes.Outside of the policy arena, economists have analyzed alcohol consumption in the context of stretching the standard model of consumer choice to include intertemporal effects and social influence. Nonetheless, perhaps the most important contribution by economists has been the repeated demonstration that there is nothing unusual about alcohol in at least one essential respect: consumers drink less ethanol (and have fewer alcohol-related problems) when alcohol-beverage prices are increased.Important econometric challenges remain, including the search for a satisfactory resolution to the conflicting results on the effect of price changes on consumption by consumers who tend to drink heavily. There are also unresolved puzzles about the relationship between drinking and productivity; even after controlling for a variety of other characteristics, drinkers tend to have higher earnings than abstainers, and women's earnings (but not men's) tend to increase with alcohol consumption.

Individuals exhibit systematic tendencies to overstate the risks of unlikely lethal events. If the risks of passive smoking are overstated in this manner, and if passive smoking is not harmful to adult health, then passive smoking by adults should have a discernible effect on subjective evaluations of health status, but no corresponding effect on health. This idea is examined empirically below using data from the National Health Interview Surveys. The empirical results can be summarized as follows. Passive smoking is associated with assessments of significantly poorer health. Poorer health assessments are associated with significantly greater medical resource use. However, direct estimates of the effects of passive smoking on health care use indicate no statistical association whatsoever. These results are consistent with a model whereby individuals systematically overestimate the effects of passive smoking on their health and where the short-term effects of passive smoking on adult health care costs are negligible.

We estimate the causal effect of mandatory participation in the military service on the involvement in criminal activities. We exploit the random assignment of young men to military service in Argentina through a draft lottery to identify this causal effect. Using a unique set of administrative data that includes draft eligibility, participation in the military service, and criminal records, we find that participation in the military service increases the likelihood of developing a criminal record in adulthood. The effects are not only significant for the cohorts that performed military service during war times, but also for those that provided service at peace times. We also find that military service has detrimental effects on future performance in the labor market.