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Category Archives: 2013

Trauma Center Eficacy: Certification Status and its Effect on Traffic Fatalities at Varying Radii

By Robert Van Dusen

The goal of the paper is to better inform policy makers on the optimal placement of trauma center facilities. Below, I examine the effect of Californian trauma centers vs. standard emergency departments on traffic fatalities for 2002 to 2008. Hospital addresses are geocoded and compared to the geographic coordinates of fatal car accidents provided through USDOT in order to create a dependent fatality density variable for every hospital at different radii. Demographic controls for different radii are constructed using ArcGIS
to serve as a model for traffic fatalities.

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Advisor: Frank Sloan, Kent Kimbrough | JEL Codes: I1, I10, I18 | Tagged: Healthcare,
Trauma, Trauma Center

Incentives and Characteristics that Explain Generic Prescribing Practices

By Rahul Nayak

This study uses the National Ambulatory Medical Care Survey (2006-2010) and Health Tracking Physician Survey (2008) to study the incentives and characteristics that explain physician generic prescribing habits. The findings can be characterized into four main categories: (1) financial/economic, (2) informational, (3) patient- dependent and (4) drug idiosyncratic effects. Physicians in practices owned by HMOs or practices that had at least one managed care contract are significantly more likely to prescribe generic medicines. Furthermore, physicians who have drug industry influence are less likely to prescribe generic medicines. This study also finds consistent evidence that generic prescribing is reduced for patients with pri- vate insurance compared to self-pay patients. Drug-specific characteristics play an important role for whether a drug is prescribed as a generic or brand-name – in- cluding not only market characteristics, such as monopoly duration length, public familiarity with the generic and the quality of the generic, but also non-clinical drug characteristics, such as the length of the generic name compared the length of the brand-name. In particular, the public’s familiarity with the generic has a large effect on the generic prescribing rate for a given drug. There are few differences between the generic prescribing habits of primary care physicians and specialists after controlling for the drugs prescribed.

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Advisor: Frank Sloan | JEL Codes: D82, D83, I11, I13, I18 | Tagged: Drug Market Charac- teristics, Efficient Prescribing, Electronic Prescribing, Generic Prescribing, HTPS, Industry Influence, NAMCS, Patient Preferences, Physician Incentives, Principle- Agent Problem

Variance Risk Premium Dynamics: The Impact of Asset Price Jumps on Variance Risk Premia

By Jackson Pfeiffer

This paper utilizes the high-frequency stock price data and the corresponding daily option price data of several highly capitalized corporations in order to investigate the impact that asset price jumps of individual equities have on the equities’ respective variance risk premia. The findings of this paper describe many characteristics of the variance risk premia of individual equities, supporting some expectations of the characteristics, and refuting others. In the process of investigating these characteristics, this paper proposes a simple estimator for the market price of the variance risk of an individual equity.

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Advisor: George Tauchen | JEL Codes:  G1, G19, G11 | Tagged: Variance Risk, Variance Swaps, Price Jumps

Government Allocation of Import Quota Slots to US Films in China’s Cinematic Movie Market

By Sabrina McCutchan

The Chinese government implements a complex regulatory system to decrease the market share of imported Hollywood films for theatrical release. The import quota, censorship, and competitive release-scheduling policies in particular severely limit Hollywood’s access to the Chinese market. However, because the government has a monopoly on film distribution and receives nearly half of all box office receipts from Hollywood films, I expect that the profit incentive is comparatively more important than protectionist motives in the decision to import a Hollywood film or grant it a revenue-sharing quota slot. This paper’s findings support this hypothesis. Using a probit model, I find that three strong predictors of Chinese box office, namely US box office, Hong Kong box office, and the action genre, positively predict entry to the Chinese market and the allocation of a revenue-sharing quota slot for US-movies released in 2012.

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Advisor: Edward Tower | JEL Codes: F14, F19 | Tagged: China, Hollywood, Motion Pictures, Protectionism, Quota

Enhanced versus Traditional Indexation for International Mutual Funds: Evaluating DFA, Wisdom Tree and RAFI PowerShares

By Heehyun Lim

This paper uses stye analysis to compare the performance of traditional international index funds and enhanced international index funds. It attempts to measure the value added beyond classic indexation by the consideration of fundamentals. By employing Sharpe’s style analysis, I formulate a synthetic portfolio composed of DFA traditional funds to imitate each enhanced index fund portfolio’s performance. Then I compare the return and volatility of each portfolio. The result shows that half of enhanced fund portfolios tested in the paper outperforms their traditional synthetic portfolio, while the other half under-perform.

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Advisor: Edward Tower | JEL Codes: G11, G15 | Tagged: Enhanced Index Fund, Fundamental, Indexation, Style Analysis

Price Discrimination and Bargaining Power in the Global Vaccine Market

By Linda Li

Since the 1980’s, the market structure of vaccines has become increasingly oligopolistic, and in some cases monopolistic. Alongside these supply trends, we see the emergence and growth of group procurement schemes on the demand side of the market. National government and international organization procure vaccines on behalf of end users. Two such organizations include the UNICEF Supply Division and the PAHO EPI Revolving Fund, for which participation is based on income or geography. Consistent with one of the main goals of group procurement, these groups obtain price discounts on vaccines relative to the private sector. This paper seeks to disentangle two possible explanations for this observed price dispersion using vaccine price data over the years 2002-2012 from UNICEF, PAHO, and the U.S. The two explanations are that of price discrimination and bargaining power. Using proxy variables in a fixed effects model, I find that price discrimination does have a significant impact on price discount. I also find support for a bargaining power effect, however with less certainty, and the existence of supply constraints. These findings have important policy implications for national governments, as well as procurement groups.

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Advisor: David Ridley | JEL Codes: I11, I18, L22 | Tagged: Bargaining Power, Group Procurement, Price Discrimination, Vaaccines

Foreign Aid Allocation and Impact: A Sub-National Analysis of Malawi

By Rajlakshmi De

Understanding the role of foreign aid in poverty alleviation is one of the central inquiries for development economics. To augment past cross-country studies and randomized evaluations, this project data from Malawi is used in combination with multiple rounds of living standards data to predict the allocation and impact of health aid, water aid, and education aid.  Both instrumentation and propensity score matching methods are used.

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Advisor: Kent Kimbrough, Lori Leachman | JEL Codes: F35, I15, I25, I32, O12 | Tagged: Development, Education, Foreign Aid, Health, Malawi, Water

Manufactured Housing Securitization

By Renan Cunha

Through prices of manufactured homes rose in the 2000’s, demand fell dramatically because of the boom in the stick-built housing market. One of the stated goals of securitization is to increase the supply of credit and decrease the cost of lending to make borrowing accessible to more homeowners.  This paper will study the effect of securitization of manufactured home loans on the availability of credit for borrowers in North Carolina.

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Advisor: Charles Becker | JEL Codes: E51, R3, R31 | Tagged: Credit Availability, Manufactured Housing, Securitization, Trailer Parks

Debunking the Cost-Shifting Myth: An Analysis of Dnamic Price Discrimination in California Hospitals

By Omar Nazzal

Cost-shifting, a dynamic form of price discrimination, is a phenomenon in which hospitals shift the burden of decreases in government-sponsored healthcare reimbursement rates to private health insurers. In this paper, I construct a data set spanning 2007 – 2011 that matches financial metrics of California hospitals to hospital- and market-specific characteristics with theoretical implications in price discrimination. The subsequent analysis is split into three stages. In the first and second stages, I use a fixed-effects OLS model to derive a point estimate of the inverse correlation between private revenue and government revenue that is consistent with recent empirical work in cost-shifting, a body of literature almost entirely reliant upon fixed-effects and difference-in-difference OLS. These types of models are encumbered by the inherent causality loop connecting public and private payment sources. I address this endogeneity problem in the third stage by specifying a fixed-effects 2SLS model based on an instrument for government revenue constructed with data from the California Department of Health Care Services and the U.S. Census. This instrument performed well in canonical tests for relevance and validity. I find that an increase in government payments causes an increase in private payments, and that the relationship is statistically-significant at all reasonable levels. In addition, I comment on properties of the data set that suggest that the original inverse correlation was due to inadequate measurements of market power. I conclude with policy implications and suggestions for future research.

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Advisor: Frank Sloan | JEL Codes: I11, I13, I18, L11, L80 | Tagged: Health Insurance, Market Structure, Medicaid, Medicare, Price Discrimination

Race and Pollution Correlation as Predictor of Environmental Injustice

By Marissa Meir

Environmental injustice is a theory that claims distributions of toxic, hazardous and dangerous waste facilities are disproportionately located in low-income communities of color. This paper empirically demonstrates an alternative cause of environmental injustice- that low-income minorities are less likely to receive sizeable enough loans to buy a house in a cleaner area. It highlights a significant time in history, from 1999 to 2007, when wealth constraints were eased and loan amounts increased for people with the same income. The results show that minorities increase their demand of environmental goods given an increase in loan amounts, suggesting that people of color care about environmental quality, but, due to wealth constraints, do not have the same opportunities
in the housing market.

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Advisor: Christopher Timmins | JEL Codes: P46, P48, Q50, Q53, Q56, Q58, R20, R21, R31, R32 | Tagged: Air Quality, Environmental Injustice, Housing Market, Income, Loan, Wealth Constraints

Questions?

Undergraduate Program Assistant
Jennifer Becker
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu