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This edition was written by Elijah Asdourian, Sam Boocker, Lorae Stojanovic, and Louise Sheiner.
2 in 5 Americans have medical debt, half owing more than $2,500. Raymond Kluender of Harvard Business School and co-authors follow 83,000 people whose debt was purchased and cancelled by nonprofit RIP Medical Debt. The nonprofit purchased debt either shortly before it would have been sold to collectors by hospitals or after it had been in collections for years. Debt cancellation reduced patients’ payments toward subsequent medical bills, possibly because they anticipated future forgiveness. Debt cancellation had no effect on patients’ access to credit, utilization of health care, or financial distress. Most debtors showed no signs of improvement in their physical or mental health. However, patients with high amounts of cancelled debt showed elevated depression, anxiety, and stress, potentially due to heightened awareness of their financial plight and the stigma associated with charity. Despite the "disappointing results from the intervention," the authors conclude that further work is needed to determine whether "medical debt relief targeted further upstream or in different populations could yield meaningful benefits."
Many Americans now say that college is not “worth the cost.” Using data on students at Texas public high schools and 35 Texas public universities from 2004 to 2016, Jack Mountjoy of the University of Chicago finds that college is both worth the cost for the students who attend and a net benefit to society. Most Texas public universities have standardized test score cutoffs above which acceptance is much more likely. Mountjoy finds that marginal admits—students with scores just above these cutoffs—are 12 percentage points more likely to earn a college degree and end up earning 5% to 10% more than marginally rejected students—those with scores just below the cutoffs—who are otherwise academically similar. Additionally, although marginally admitted students spend more time in school than those with lower scores, the extra tuition is offset by grants aid. Lastly, under most assumptions, the increased tax revenue from marginal admits after graduation more than pays for the cost of a college education, making college worth it for both enrollees and the government.
Nicholas Bloom of Stanford University and co-authors developed a big-data method to track the emergence and diffusion of novel technologies across businesses, industries, and regions. Using textual data from millions of U.S. patents (from 1976 to 2014), Wikipedia pages, online job postings (2010 to 2019), and earnings calls (2002 to 2019), the authors find that 56% of new technologies emerge from Silicon Valley and the Northeast Corridor and diffuse slowly across the U.S. Additionally, they note new technologies tend to create jobs for skilled workers (as measured by educational attainment), but over time, they find that the average skill level of workers using the technology declines. The study also highlights how specialized research, development, and production roles tend to remain concentrated in the original innovation hubs even as emergent technologies spread, providing these hubs with a sustained advantage over time.
"Given my thinking about the role of supply and demand in recent inflation dynamics, as well as the role anchored inflation expectations are playing in bringing price-setting behavior back to normal, I expect the disinflationary trend to continue. There is still a bit of room for further supply improvement, especially in the services sector, where solid labor supply growth will continue to ease wage and inflation pressures," says Adriana Kugler, member of the Federal Reserve Board of Governors.
"On the demand side, I expect consumption growth to slow some this year, as households have drawn down large balances of excess savings accumulated during the pandemic and are facing restrictive financial conditions. We may already be seeing some of that slowing; consumer spending was soft in January and February, on average, suggesting that we are on track for lower consumption growth in the first quarter than we saw during the second half of last year…. Even with demand growth cooling, given the backdrop of solid supply, my baseline expectation is that further disinflation can be accomplished without a significant rise in unemployment."
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