Nick Grasley

Abstract: Each year, the U.S. federal government spends $48 billion providing large rental subsidies to a relatively small share of low-income households, many of whom wait years to receive assistance. Unlike other safety net programs, rental assistance subsidies uniquely adjust when area rents rise or when household income falls, smoothing the share of income spent on rent. Motivated by this design and the high fixed costs of adjusting housing consumption, I conceptualize federal rental assistance as insurance against joint rent-income risk. To analyze this risk, I use the Panel Survey of Income Dynamics (PSID) and rich HUD administrative data, showing that rents exacerbate consumption risk beyond income risk alone. I quantify how rental assistance insures this particular consumption risk using a sufficient statistics framework, finding that rental assistance generates $1.51 in benefits per dollar of government spending, significantly larger than the previous literature’s estimate of $0.66 when ignoring the insurance value. I attribute this large insurance value to insuring rent volatility for fixed-income households and insuring income in high-rent locations. Using a structural lifecycle model, I conduct counterfactual analyses that demonstrate that the program’s dynamic subsidy design and rationing through waitlists are crucial features that enhance its insurance value.

Abstract: Corrective policy in sports betting markets is motivated by concerns that demand is driven by behavioral bias rather than a normative preference to gamble. We conduct a field experiment with frequent sports bettors to measure the impact of two biases, overoptimism about financial returns and self-control problems, on the demand for sports betting. We find widespread over-optimism about financial returns. The average participant predicts that they will break even, but in fact loses about 8 cents for every dollar wagered. Self-control problems are smaller and less common. We estimate a model of biased betting and use it to evaluate several corrective policies. Our estimates imply that the surplus-maximizing corrective excise tax on sports betting is twice as large as prevailing tax rates. We estimate substantial heterogeneity in bias across bettors, which implies that targeted interventions that directly eliminate bias could improve on a tax. However, implementation is challenging: we show that two bias-correction interventions favored by the gambling industry do not deliver the targeting improvements.

PDF survey instruments available for download. Qualtrics files are available on request.

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Abstract: Vertical integration between insurers and primary care practices is increasingly common in the US healthcare market, raising concerns among policymakers. We use medical claims data from the Colorado All Payer Claims Database to study a 2017 insurer-physician acquisition, focusing on how it aligns incentives within the integrated firm. We propose a simple conceptual framework to guide our analysis. Our framework produces two main predictions, which we empirically document. First, in Medicare Advantage, where insurer revenue is tied to patient risk scores, we predict the integrated practice will increase the intensity of diagnostic coding. Using a patient-level event study design, we find that integration increases diagnosis-based payments to the insurer by $998 to $1,805 per patient per year, without a corresponding increase in treatment. Second, as the integrated firm bears the cost of specialist care, our framework predicts that the integrated practice will steer referrals towards more cost-effective specialists. Indeed, we confirm this prediction in the Commercial market, where we estimate a referral choice model and find that the acquired practice saves approximately $300 per inpatient referral. Our results reveal a crucial trade-off: integration can increase taxpayer costs in one market while generating efficiency gains in another. Furthermore, we show that contracting at non-acquired practices can replicate the diagnostic coding effect. This substitutability between integration and contracting suggests that policies targeting only mergers may be ineffective at addressing strategic coding behavior.

Abstract: Many people with mental health problems do not seek treatment despite evidence that therapy can improve well-being. Working with a provider of gambling addiction therapy, we conduct a field experiment to measure how behavioral biases impact therapy demand and what interventions may overcome them. We consider two behavioral biases: misperceptions and willpower problems. To study misperceptions, we measure how participants’ perceptions of therapy change after attending a session. To study willpower issues, we measure participants’ willingness to pay for a commitment device to attend therapy. Lastly, we evaluate the effectiveness of two scalable interventions--financial incentives and text message encouragements--at increasing therapy takeup.

Abstract: Private equity (PE) investment in the U.S. healthcare sector has grown exponentially, raising concerns about its impact on the cost and quality of care. This paper investigates how PE acquisitions alter the behavior of primary care practices (PCPs) and, crucially, explores heterogeneity based on the acquirer's structure. We distinguish between acquisitions by pure financial sponsors and those by PE-insurer joint ventures, which may face conflicting incentives between profit maximization and managing population health costs. We construct a novel national dataset by linking PitchBook data on PE acquisitions from 2006 to 2018 with Medicare fee-for-service claims. Then, we employ a staggered difference-in-differences strategy to compare acquired PCPs to not-yet-acquired PCPs. Using state All-Payer Claims Data (APCD), we will further test for differential effects among Traditional Medicare and Medicare Advantage patients, where insurer-backed owners have stronger incentives to control utilization.