Imperfect information is a pervasive feature of health care markets. Therefore, measuring the quality and value of health care services may inform efforts to improve health care delivery. This dissertation explores several applications of performance measurement in health care: describing national practice patterns, evaluating the effects of payment reforms, and contributing to policies that reward providers for measured performance. Chapter one describes the use of low-value services in fee-for-service Medicare. Drawing from evidence-based lists of services that provide minimal clinical benefit, I develop 26 claims-based measures of low-value services. Applying these measures to Medicare claims, I demonstrate that 42% of beneficiaries received at least one of these services in a year, which constituted 2.7 % of overall annual spending. When more specific and less sensitive versions of the measures were used, I detected low-value service use for 25% of beneficiaries, constituting 0.6% of overall spending. In adjusted analyses, spending on low-value services was substantial even in regions at the 5th percentile of the regional distribution of low-value spending. Adjusted regional use was positively correlated among five of six categories of low-value services. These findings are consistent with the view that wasteful practices are pervasive in the US health care system. The results also suggest that the performance of claims-based measures in supporting policies to reduce overuse may depend heavily on how the measures are defined. Chapter two examines the role of provider organizations in influencing the delivery of low-value services. In Part I of this chapter, I assess whether provider organizations exhibit distinct profiles of low-value service use in fee-for-service Medicare. In one sample of 3,137 large provider organizations and another sample of 250 provider organizations that entered the Medicare Pioneer Accountable Care Organization (ACO) Program or the Medicare Shared Savings Program, I demonstrate that provider organizations’ use of low-value services exhibits considerable variation, substantial persistence over time, and modest consistency across service types. In Part II of this chapter, I evaluate the effects of the Pioneer ACO Program on the use of low-value services. In a difference-in-differences analysis, I compare the use of low-value services between beneficiaries attributed to Pioneer ACOs and beneficiaries attributed to other providers, before (2009-2011) vs. after (2012) Pioneer ACO contracts began. During its first year, the Pioneer ACO program was associated with modest reductions in low-value services, with greater reductions for organizations that had provided more low-value services. The findings in this chapter suggest that provider organizations can influence the use of low-value services by affiliated physicians, and that organization-level incentives can reduce low-value practices. Chapter three analyzes the economic properties of performance measures used in both health care and education policy. Because observable outcomes constitute a noisy signal of performance in these settings, shrinkage estimators are often used to improve measurement accuracy. I demonstrate that these improvements in accuracy come at the cost of reducing a measure’s responsiveness to agent behavior, thereby diluting incentives for performance improvement. In a model of consumers sorting between agents, I show that welfare depends on two components: (1) accuracy of performance signals, which promotes efficient consumer sorting, and (2) incentives for performance improvement, which promote efficient agent effort. Using Monte Carlo simulation, I evaluate the accuracy and incentive properties of various techniques for estimating hospital performance in heart attack mortality. Shrinkage estimators entail substantial incentive distortions, particularly for smaller hospitals, which experience an approximate 50-70% “tax” on improvement. Several estimation techniques, including the methods currently used by Medicare, are dominated on the basis of both accuracy and incentive criteria. I discuss various policy alternatives to shrinkage estimation, such as increasing the timespan of measuring performance. / Health Policy

This dissertation focuses on three prominent areas of macroeconomic policy: fiscal stimulus, bail-outs and industrial policy, and monetary policy. In each case, I analyze the nature of the problem without intervention first before turning to why and how policy can be used to improve outcomes. In the first chapter, I study how relative demand shocks for different goods and services propagate through the economy to affect aggregate employment – and I use these insights to show how fiscal stimulus should be designed to achieve the greatest bang for buck in terms of employment. In the second chapter, I study how firm entry and exit in one industry can affect other industries and the economy as a whole through input-output relationships. I characterize which firms and industries are systemically important, show that the equilibrium is generically inefficient, and study when and how bailouts can be used to improve welfare. In the final paper, I provide a new microfoundation for downward wage rigidity, show that this microfoundation yields predictions that are consistent with the data, and study how monetary policy should behave given this microfoundation. / Economics

This dissertation presents three chapters about US tax and spending policy. The first chapter investigates the take-up of a tax refund for corporate losses. We find that few firms claim the refund despite that it dominates the alternative option. This finding indicates that many firms fail to optimize perfectly with respect to taxes. The second chapter estimates corporate responses to a tax incentive for investment. We find the largest responses among small firms and firms without an alternative tax shield, suggesting that the tax incentive operates through both the price and cash mechanisms. The third chapter tests for partisan effects on the distribution of federal spending within congressional districts. Even when conditioning on institutional contexts with greater partisan influence, I find little evidence that parties tilt the distribution of federal spending to favor co-partisan and swing voters. / Political Economy and Government

The way in which governments borrow has changed dramatically over the last decade. The first two chapters of this dissertation study the implications of the rise of local currency sovereign borrowing in emerging markets. Chapter 1 presents a method to measure the credit risk on local currency sovereign debt. Chapter 2 argues that private sector balance sheet mismatch explains why nominal sovereign debt risk is not free from default risk. Chapter 3 studies the costs of sovereign default by exploiting the timing of legal rulings in the case of Republic of Argentina v. NML Capital to identify the causal effect of increases in sovereign default risk on firm performance. / Political Economy and Government

This dissertation consists of three empirical essays in development and behavioral economics. Chapter 1 considers the impact of heavy alcohol consumption on savings behavior among low-income males in India. High levels of alcohol consumption are more common among the poor. This fact could have economic consequences beyond mere income effects because alcohol impairs mental processes and decision-making. Since alcohol is thought to induce myopia, this paper tests for impacts on self-control and on savings behavior. In a three-week field experiment with low-income workers in India, I provided 229 individuals with a high-return savings opportunity and randomized incentives for sobriety. The incentives significantly reduced daytime drinking as measured by decreased breathalyzer scores. This in turn increased savings by approximately 60 percent. No more than half of this effect is explained by changes in income net of alcohol expenditures. In addition, consistent with enhanced self-control due to lower inebriation levels, incentivizing sobriety reduced the impact of a savings commitment device. Finally, alcohol consumption itself is prone to self-control problems: over half of the study participants were willing to sacrifice money to receive incentives to be sober, exhibiting demand for commitment to increase their sobriety. These findings suggest that heavy alcohol consumption is not just a result of self-control problems, but also creates self-control problems in other areas, potentially even exacerbating poverty by reducing savings. Chapter 2 (with Esther Duflo, Michael Kremer, and Jon Robinson) investigates agricultural technology adoption in Sub-Saharan Africa. Insufficient knowledge of appropriate use can hamper technology adoption. In the agricultural context, if farmers do not observe each others' inputs, diffusion of both information on the optimal input mix and of the technology itself may be slow. In the context we examine, conditional on using fertilizer, farmers tend to systematically overuse fertilizer (per treated area) on the intensive margin, hence, making it on average unprofitable and possibly curbing usage at the extensive margin. This paper reports results from a large-scale field experiment, which introduced a simple and salient tool, a blue measuring spoon, to help farmers remember how much fertilizer to use. A randomly selected subset of farmers received the technology for free, and the remaining farmers can purchase it at fertilizer stores at a nominal price. Farmers who were randomly assigned to receive a measuring spoon subsequently improved knowledge of how much fertilizer to use, and were more likely to use fertilizer. Spoon purchases among the remaining farmers were higher when these were more likely to use fertilizer due to a randomly assigned fertilizer discount program, and when communication about agriculture was encouraged. Unlike fertilizer adoption itself, purchase and use of measuring spoons diffused rapidly through social networks. Chapter 3 (with Tom Zimmermann) provides new empirical evidence on trading behavior among individual investors. The main contribution of this essay is to contrast competing explanations of the disposition effect, investors' tendency to hold losing investments too long and to sell winning investments too soon, based on their predictions for realizing different sizes of gains and losses. We find that for all holding periods longer than one month and for both gains and losses, the probability to sell a stock declines monotonically with the size of the absolute return. This fact is not consistent with the model of realization utility, but it is consistent with a version of prospect theory as outlined below. Moreover, we find that investors' propensity to make any trade is largest for small absolute portfolio returns, a fact that is difficult to explain by the existing theories. / Economics

This dissertation uses tools from economics to study three different aspects of educational markets in the developing world. In chapter 1, I analyze how competition among private schools in Pakistan affects student outcomes when (1) the match between a school and a student matters for learning, and (2) poorer students may be less informed about their match when they make enrollment decisions. I find that greater competition may lead schools to compete more intensively for wealthier, better-informed students, lowering learning for poorer students in the average private school and increasing learning for wealthier students. In chapter 2, I examine how cultural norms that encourage children to care for their parents when they reach adulthood affect human capital investment in children in Ghana, Indonesia, Rwanda, and Mexico. I find that children targeted by these norms receive more educational investments. Finally, in chapter 3, I study the labor market for public school teachers in Pakistan by analyzing the effect of a policy shock that changed both teacher salaries and accountability on student learning. I find that simultaneously lowering teacher salaries and increasing accountability lowered the cost of providing education and improved students’ learning. / Public Policy

While economic geography is concerned chiefly with proximity, models in urban economics eliminate proximity as a relative metric in order to preserve tractability. I introduce a new method of solving spatial models that allows for the consideration of proximity in an economic geography setting while retaining much of the tractability of the urban framework. The first chapter in this thesis introduces the solution method for continuous space geography models and shows how it reduces the complexity of the equilibrium conditions and allows such a model to generate more predictions than was previously possible. In this chapter, I build a model of firm location decisions in a spatial setting in order to provide a new explanation for the relationship between productivity and density: sorting of heterogeneous firms for market access. This geographic model of sorting breaks observa- tional equivalence between firm sorting and agglomeration forces: under specific conditions, positive shocks to density can negatively affect average productivity through changes in the local composition of firms, inconsistent with models of agglomeration forces without sorting. Using restricted access establishment-level Census data, I document strong intra-city relationships between location and firm characteristics predicted by the model. I test for evidence of composition effects, instrumenting for the supply of new non-residential real estate construction using the geographic distribution of multi-city real estate developers, and find evidence of firm sorting. The second chapter in this thesis finds persistent differences in self-reported subjective well-being across U.S. metropolitan areas and uses historical data to show that cities that are now declining were also unhappy in their more prosperous past. The third chapter in this thesis considers the spatial location decisions of multi-unit firms and highlights two previously understudied potential agglomeration and dispersion forces: intra-firm distance costs and market cannibalization. / Political Economy and Government

This dissertation comprises three essays on industrial organization. The first essay studies how product-level entry and exit decisions impact business and public policy analysis. It provides an empirical model that incorporates these decisions and then estimates it in the context of the commercial vehicle segment of the US automotive industry. Finally, it demonstrates the importance of accounting for product-level changes using the $85 billion decision to rescue two US automakers in 2009. The second essay studies how two period strategies perform relative to Markov perfect strategies in discrete dynamic games. In particular, it considers a simple entry/exit game and shows that agents sacrifice very little in terms of expected discounted payoffs when they employ these simpler strategies. It also shows this result is robust to varying the underlying market characteristics. The third essay estimates the causal impact of research expenditures on scientific output. Unexpected college football outcomes provide exogenous variation to university funds, and in turn, research expenditures in the subsequent year. Using this variation, it estimates the dollar elasticity of scholarly articles, new patent applications, and the citations that accrue to each. / Business Economics

Why do firms cut hiring so sharply in recessions? This dissertation explores two answers. Chapters 1 and 2 propose a financial channel of wage rigidity, whereby wage rigidity among incumbent workers forces firms to reduce hiring by squeezing their internal funds. Chapter 3 examines how the procyclicality of quits, through the replacement vacancies they entail, amplifies the cyclical fluctuations of total job openings. / Economics

In my dissertation, I study government policies and their effects on the behavior of agents in the economy. Chapter 1 discusses the effects that subsidies for small firms have on aggregate output and productivity, with an empirical application to policies in India. Chapter 2 studies the effects of lowering communication costs on structural transformation, with an empirical focus on the roll out of Rural Free Delivery in the United States. Chapter 3 presents a method to estimate the effects that increased transparency have on deliberation, in particular that of the Federal Reserve Bank. / Business Economics