This week from CEPR: February 17

Thursday, February 17, 2022

Highlights from some of the latest research reports published in the Centre for Economic Policy Research (CEPR) network’s long-running series of discussion papers, as well as some other recent CEPR publications.

Also, links to some of the latest columns on Vox, the Centre’s policy portal, which provides ‘research-based policy analysis and commentary from leading economists’.

**** You can sign up to our journalist mailing list here

**** Journalists can also apply for access to CEPR's Discussion Paper series via email


     

    • New Discussion Papers


    • CHEAP OPIOIDS AND OVER-PRESCRIPTION: The causes of America’s downward spiral into addiction 

    THE DOWNWARD SPIRAL
    Jeremy Greenwood, Nezih Guner, Karen A. Kopecky
    CEPR DP No. 17033 | February 2022

    There have been more than 500,000 opioid overdose deaths in the United States since 2000. A new CEPR study by Jeremy Greenwood, Nezih Guner and Karen Kopecky traces the proliferation of abuse and deaths over the last two decades and identifies several key contributing factors and findings: 

    • In 1996 Purdue Pharma introduced OxyContin with an aggressive marketing campaign. ‘Oxy’ came from the opioid-based painkiller oxycodine and ‘Contin’ meant continuous. Purdue Pharma asserted that because the drug released its effect in a prolonged slow continuous manner the rate of addiction was less than 1%. This was allowed by the Food and Drug Administration (FDA), with devastating results. 
    • The pills were open to abuse by those with or without pain. After the slow-release coating was removed, they could be crushed and then either snorted or mixed with water and injected.
    • Starting around the year 2000 there was a dramatic increase in number of opioid prescriptions per person for both the college- and non-college-educated populations.  The non-college educated were much more likely to have an opioid prescription than the college educated. The former often work in occupations involving physical labour. Additionally, the amount of opioids consumed, conditional on a prescription, also rose. Again, this was particularly true for those without a college degree.
    • The price of prescription opioids has fallen dramatically since 2000. This was due to the advent of generic prescription opioids, as well as the expansion of social programs such as Medicare and Medicaid that subsidised the purchase of opioids. The share of opioids prescriptions funded by the government grew from 17% in 2001 to 60% in 2010.
    • Over the same period the street price of opioids dropped by a factor of 3. This has been chalked up to both the illegal imports of inexpensive powerful synthetic opioids, for example fentanyl, from China and elsewhere.
    • Since 2000, while prices were falling, the average opioid prescription also became more potent; it increased by 72% for no-college graduates and 34% for college graduates. 
    • Finally, longer prescription lengths also contributed to increased deaths. While doctors were not more likely to write opioid prescriptions for nonusers, they became more likely to keep patients on opioids once they started using them.

    Taken together, the combined effect of lower prices and changing medical practices accounts for the entire increase in deaths among the non-college population and 66% of the rise in deaths among college graduates. These factors also contribute to a significant rise in non-employment. Non-employment among those without a college degree increases by a factor of 20 and the number of college graduates not working nearly doubles.


    • LIFESTYLE BEHAVIOURS AND WEALTH-HEALTH GAPS IN GERMANY

    LIFESTYLE BEHAVIOURS AND WEALTH-HEALTH GAPS IN GERMANY
    Lukas Mahler, Minchul Yum 

    CEPR DP No. 17036 | February 2022

    A new CEPR study by Lukas Mahler and Minchul Yum documents significant gaps in wealth across health status over the life cycle in Germany – a country with a universal healthcare system and negligible out-of-pocket medical expenses, and generous sick-leave policies. These gaps appear not only within the nationally representative sample but also within education group. The gaps begin to open up at around the age of 25 and grow over the life cycle before stabilising after retirement.

    What explains such large gaps in a country like Germany? The authors explore lifestyle behaviours (smoking, exercise, nutrition) as potential drivers, and show that individual lifestyle behaviours account for over half of the model-generated wealth gaps by health status (i.e., around a quarter of the observed wealth-health gaps). Differences in healthy lifestyles affect the probability of good health outcomes in the future. Good health, in turn, affects wealth accumulation through differences in labour income and savings rates across health types. Wealthier individuals also engage in more health-promoting efforts, dynamically amplifying the wealth-health association. Because individual healthy lifestyles act as an amplifying force of the dynamic relationship between wealth and health, large and persistent wealth-health gaps can occur even in countries where the healthcare system does not frequently entail large out-of-pocket expenses.

    The results imply that policies aimed at improving individual health behaviours (e.g., conditional cash transfers when joining a gym), can result not only in lasting benefits in terms of improving health inequality over the life course but may also extend into dimensions of economic inequality.



    COVID-19 FORECASTS ARE VALUABLE BUT NEED TO BE USED WITH CAUTION

    Laura Coroneo, Fabrizio Iacone, Alessia Paccagnini, Paulo Santos Monteiro               
    16 February 2022

    Writing at Vox, Laura Coroneo, Fabrizio Iacone, Alessia Paccagnini and Paulo Santos Monteiro examine the predictive accuracy of the COVID-19 death projections produced by several independent forecasting teams and collected by the US Centers for Disease Control and Prevention. 

    The authors find that forecasters can be more successful over long horizons (three to four weeks) than a simple benchmark model. The ‘ensemble forecast’, which combines all forecasts, is one of the top performers. Policymakers should not rely on a single forecasting team (or a small set) to predict the evolution of the pandemic, but should hold a large and diverse portfolio of forecasts.

     

    FASTER INTERNET IS ERODING BRITISH SOCIAL FABRIC

    Andrea Geraci, Mattia Nardotto, Tommaso Reggiani, Fabio Sabatini                  
    12 February 2022

    A new study by Andrea Geraci, Mattia Nardotto, Tommaso Reggiani and Fabio Sabatini shows that following broadband take-up, civic and political engagement systematically declines with increasing speed of Internet connection. The research shows that time-consuming activities oriented to the pursuit of collective welfare, such as engagement in associations, suffer the most from broadband penetration, while relationships with family and friends are less affected.


    WHAT INFLUENCES OUR ATTITUDES TOWARDS IMMIGRANTS? A network science approach across regions

    Rachael Kei Kawasaki, Yuichi Ikeda                  
    10 February 2022

    Writing at Vox, Rachael Kei Kawasaki and Yuichi Ikeda show that regardless of the country, prejudice is the most central determinant of attitudes towards immigrants, especially negative attitudes towards people of another race. 

    The research shows that individuals in European countries display a more values-based approach towards determining attitudes, compared to non-European contexts, meaning that feelings towards specific issues, like towards immigrants, are derived by more stable and general attitudes, such as the importance one places on fairness or on tradition.


    THE PRICE OF BECOMING AN ADULT: 16-18 year olds suffer sharp increases in victimisation of crime with greater access to alcohol and vehicles

    Anna Bindler, Randi Hjalmarsson, Nadine Ketel, Andreea Mitrut              
    15 February 2022

    Using data from all reported victimisations in the Netherlands between 2005 and 2018, a study by Anna Bindler, Randi Hjalmarsson, Nadine Ketel and Andreea Mitrut finds a sharp and discontinuous increases in victimisation risk (of crime) at ages 16 and 18, when bundles of rights – to purchase alcohol and tobacco, to enter bars and clubs, to drive mopeds and cars – are conferred on Dutch young people. The findings raise policy questions related to the optimal timing of granting these rights and whether steps should be taken to offset the risks associated with them.


    UN CLIMATE CHANGE GOALS ARE FAILING: Introducing a new framework to decarbonise the economy

    Mauro Pisu, Filippo Maria D’Arcangelo, Ilai Levin, Asa Johansson                   
    14 February 2022

    Despite recent commitments, countries’ climate mitigation policies are not enough to meet their ambitious emissions reduction targets, according to a new study by Mauro Pisu, Filippo Maria D’Arcangelo, Ilai Levin and Asa Johansson, which puts forward a framework for designing comprehensive decarbonisation strategies that promote growth and social inclusion. The authors suggest a policy mix based on three components: 

    • Emission pricing 
    • Standards and regulations 
    • Complementary policies that offset distributional effects. 

    A robust and independent institutional framework and credible communications campaigns are key to managing policy constraints and enhancing public acceptance of mitigation policies.


    CHANGING VIEWS ON TRADE’S IMPACT ON INEQUALITY IN WEALTHY COUNTRIES

    David Dorn, Peter Levell            
    14 February 2022


     

    Writing at Vox, David Dorn and Peter Levell challenge the common view that trade has little impact on inequality in high-income countries. The authors show that manufacturing employment contracted sharply in countries like the US and the UK which faced rapid net import growth from China. The resulting, persistent adverse effects on employment and incomes of low-skilled workers do not appear to have been offset by trade’s effect on prices, which seems to have benefited rich and poor households alike. Mitigating these effects is an important but difficult task for policymakers.


    THE IMPACT OF MONETARY POLICY ON INCOME AND WEALTH INEQUALITY: Evidence from Finland

    Petri Mäki-Fränti, Aino Silvo, Adam Gulan, Juha Kilponen        
    06 February 2022

    New monetary policy instruments introduced by the ECB following the 2008-2013 financial and debt crisis have raised concerns that central banks’ securities purchase programmes disproportionately benefited wealthy households. 

    Using Finnish data, a study by Petri Mäki-Fränti, Aino Silvo, Adam Gulan and Juha Kilponen finds that while the impact on economic growth has been significant, on average the changes in income and wealth disparities have been small. Nevertheless, the results suggest the precise channels through which monetary policy affects inequality may differ across countries.


    TELEWORKING IS HERE TO STAY AND MAY RAISE PRODUCTIVITY

    Pawel Adrjan, Gabriele Ciminelli, Chiara Criscuolo, Peter Gal, Alexandre Judes, Giuseppe Nicoletti, Michael Koelle, Timo Leidecker, Francesco Losma, Cyrille Schwellnus, Tara Sinclair                  
    10 February 2022

    Leveraging real-time online job postings data from Indeed and a recent OECD survey of managers and workers, a study by Pawel Adrjan and colleagues shows that the recent surge in teleworking is here to stay – for most workers in a hybrid mode with two or three working days per week at home. The research shows that a majority of managers and workers value teleworking positively but emphasise the need for adaptive measures, such as the coordination of schedules and investment in ICT hardware, software, and skills.

    Policies should enable access to teleworking from anywhere by promoting investments in broadband access and childcare facilities – both in urban and rural areas. Policies should also empower workers and managers by supporting upskilling and training on both hard (notably ICT) and soft skills, and should protect workers from excessive teleworking by adapting the legal environment – with a special focus on health insurance coverage for remote working and the right to disconnect.


    STUDENTS FROM LOW-INCOME FAMILIES MORE LIKELY TO BE UNDERMATCHED TO THEIR DEGREES BOTH ACADEMICALLY AND IN TERMS OF EARNINGS POTENTIAL: Evidence from the UK

    Stuart Campbell, Lindsey Macmillan, Richard Murphy, Gill Wyness                     
    13 February 2022

    A study by Stuart Campbell, Lindsey Macmillan, Richard Murphy and Gill Wyness follows an entire cohort of 140,000 students in the UK from school to university to discover the types of students that tend to ‘undermatch’ (attend a less selective degree than expected, given their A levels). 

    The research finds that students with a lower socioeconomic status background are more likely to be undermatched to their degrees both academically and in terms of earnings potential, and women are more likely to undermatch than men when it comes to earnings potential. Why do students undermatch?

    • Distance to universities does not play a large role in England. Comparing two students in the same area, the lower SES student is still more likely to attend a lower quality degree course. 
    • The secondary school attended is very important in terms of mismatch. Attending a secondary school in which a high proportion of students go on to college typically lowers the rate of undermatch. 
    • None of gender earnings match gap is reduced by school-level or geographic factors. Instead, the majority of the of the gap can be attributed to the degree subject studied.


    ZERO HOURS CONTRACTS IN THE UK: Are workers empowered or exploited? 

    Juan Dolado interviewed by Tim Phillips, 15 February 2022

    In the UK around 1 million workers have so-called zero-hours contracts. Does this mean that gig-economy workers are being exploited, or do they expand flexible working?
    You can read more about this research and download the free DP: Dolado, J, Lale, E and Turon, H. 2021. 'Zero-hours Contracts in a Frictional Labor Market'. CEPR



    A FRENCH REVOLUTION IN STATE-BUILDING

    Cédric Chambru, Emeric Henry, Benjamin Marx interviewed by Tim Phillips, 11 February 2022

    One of the most remarkable achievements of the French Revolution for ordinary people was the reorganisation of local government. Cédric Chambru, Emeric Henry and Benjamin Marx tell Tim Phillips how local state capitals emerged as a result, and what this tells us about how state capacity develops.

    Read the VoxColumn about this research: Chambru, C, Henry, E and Marx, B. (2022), Building a state one step at a time: Evidence from France, VoxEU.org, 03 February.

    Download the free DP: Chambru, C, Henry, E and Marx, B. 2021. 'The Dynamic Consequences of State-Building: Evidence from the French Revolution'. CEPR