CAREER: Market Imperfections and the Welfare Measurement of Government Intervention

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The investigator develops theoretical models and empirical methods to advance our understanding of market imperfections and improve the measurement of the welfare impact of government policies. The central theme is that many market frictions which provide potential rationales for government intervention also make it difficult to measure the value (or lack thereof) of those interventions. This research aims to provide tools for accurate measurement of individuals' willingness to pay for government policy changes towards insurance market policies (e.g. subsidies and mandates), non-market goods such as Medicaid and food stamps, and place-based policies, with a particular focus on policies aimed at improving outcomes for low-income children in disadvantaged neighborhoods.This research is aligned on three themes: information, redistribution through non-market goods, and place and upward mobility. From an information standpoint, this project shows how individuals' private information about future adverse events can prevent the ability of private insurance markets to insure this risk. This generates a potential rationale for government intervention, but it also suggests traditional approaches systematically under-estimate the value of corrective policies. The investigator provides methods for correcting existing methods, as well as new methods that exploit ex-ante responses to learning about future adverse events. From a redistribution through non-market goods standpoint, many government expenditures are provided via non-market goods (e.g. health insurance subsidies, food stamps). The investigator develops tools to correctly measure the impact of these policies and nest them into a welfare framework that compares their impacts to other policies with similar distributional incidence. Finally, from a place and upward mobility standpoint, this project addresses how we can identify and measure the welfare impact of government policies targeted towards children from disadvantaged backgrounds and neighborhoods. This includes analyses of randomized controlled trials (in collaboration with local housing authorities) to help reduce the barriers faced by families seeking to move to better neighborhoods in which to raise their children.