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Janet Currie Began Her Career As a Labor Economist, with Important The Region Janet Currie began her career as a labor economist, with important work on game and bargaining theory, arbitration and negotiation strategy, and wage and employment determination. Today, as director of Princeton University’s Center for Health and Wellbeing, she explores the frontiers of genetic expression during fetal development, the impact of incentives on provision of health care and the effec- tiveness of the U.S. social safety net. Further, as director of the National Bureau of Economic Research’s Program on Children, she encourages cutting-edge research on pollution from cook stoves in India, the impact of drought on education and the distributional effects of Head Start. The core element of all of this work—the bridge that connects what seem quite disparate fields of economic research—is human capital. It’s the idea—once controversial, but now undisputed—that humans possess skills, knowledge and abilities of enormous economic value. Some human capital is innate, but much is acquired through education, training and experience, as well as investment in physical and mental health. Understanding human capital, its many sources and the economic outcomes associated with its enhancement or degradation form a path that Currie has pursued for decades. Currie is known for her keen insight, innovative technique and unwavering dedication to solid research. “The thing that characterizes Janet and her work is her fierce determination to get to the bottom of social problems—particularly those concerning children,” observed economist David Card, a colleague and mentor. “She takes on Head Start, Medicaid or child nutrition, and works on it tirelessly over 15 years or more, using different data and methods to really understand what’s going on.” Currie herself has no trouble explaining the coherence of her research agenda. “Labor economists think a lot about human capital and investments in it. Tradition- ally, that’s something to do with education,” she notes. “But I’m interested in health as human capital as well, and understanding how health and education intersect.” And Currie is finding that interactions are complex and cross-generational. Maternal health affects child educational outcomes; education, in turn, influences parental and child health; and both have tremendous economic consequences. “It is a broad concept, human capital,” she observes. “Not all these different boxes, but an integrated whole.” SEPTEMBER 2012 The Region Photographs by Peter Tenzer Peter by Photographs 13 SEPTEMBER 2012 The Region FINANCIAL INCENTIVES Currie: Yes. It’s argued that these varia- causing surgical complications, then AND MEDICAL PRACTICE tions show there’s waste or inappropriate putting caps on damages makes you do utilization, but that’s not a very direct way more and not fewer. Region: I’d like to start with a few ques- to go at it. The QJE piece on C-sections JSL reforms, which had been largely tions regarding your research on incen- was looking at a specific argument about neglected, are interesting from an eco- tives and health care. Your 2008 Quar- why doctors might be doing too much, nomic standpoint because they get you terly Journal of Economics study of tort which is that they’re afraid of legal liability. away from this deep pockets regime to reform and birth outcomes with your It’s very common for people to say doc- one where you’re going to sue the hos- husband, Bentley MacLeod, and your tors do too much because they’re afraid of pital and the doctor. So it increases the 2011 paper together that broadened this being sued if they don’t. But there’s a re- doctor’s legal liability if they do some- “joint and several liability” research be- ally obvious alternative hypothesis, which thing wrong. yond childbirth procedures suggested is that doctors do too much because the that economic incentives play a crucial more they do, the more they get paid. Region: So the new JSL regime appor- role in both the U.S. tort system and tions liability among concerned parties, medical practice. Region: Sure. Incentives work. not simply to the deepest pocket. Could you tell us more about this work on the complex and sometimes Currie: Yet no one ever says that, so in our Currie: That’s right. And it reduced C-sec- conflicting financial incentives in paper, we look at how people respond to tions. So our results point to the idea that health care and how it might relate (if changes in the liability environment. One the reason we have so many C-sections is at all) to your June 2012 NBER paper of the things we realized while we were that doctors make twice as much money on physician-induced antibiotic use in doing it is that for something like child- doing them, which is the same thing we China … birth, the doctor often doesn’t really face had found in an earlier study of Med- any financial liability because if you have icaid fees where we were looking at the Currie: Yes, it’s all very closely related, jurisdiction with Joint and Several Liabil- differential [in payment] between doing actually … ity (JSL), people are going to go for the a C-section or doing a normal delivery. deep pocket. The deep pocket is not the When that differential increased, the rate Region: And for that matter, perhaps also doctor; the deep pocket is the hospital. of C-sections went up for the Medicaid to your much earlier American Economic If you actually go and read these cases, people. So it’s consistent with that. Review paper with Jonathan Gruber and sometimes they seem very strange. You In the more recent paper about JSL, Michael Fischer on physician payments, have a C-section; something goes terribly we were trying to look more broadly at which found that increasing Medicaid/ wrong. And instead of talking about what what happened to accident rates. We’re private fee ratios significantly decreased went wrong in the surgery, they’re spend- looking at accidental deaths, and most infant mortality rates. ing all of their time saying, “Well, the accidental deaths are actually among the Would you tell us more about this nurse should have done this or that.” The elderly. Many of them are trip-and-fall body of work? reason for that is that the nurse is an em- cases: Somebody leaves something ly- ployee of the hospital, while the doctor is ing around or doesn’t fix the handrail, Currie: Sure. Physician incentives are an independent contractor. So if you want and an elderly person falls and dies. And extremely important for the health care to nail the hospital, the deep pocket, you again, we found that going away from system, and everyone—or at least all have to show that the nurse was negligent. the common law regime that encour- health economists—thinks that finan- The upshot of our study is that differ- aged going after deep pockets to a legal cial incentives can distort people’s deci- ent types of tort reforms have quite dif- regime where everybody is responsible sions. But it’s very hard to pin that down. ferent effects. We found that if you put for the damage that they cause reduced There’s a lot of literature on things like caps on damages, you actually got more accident rates. small area variations in use of medi- C-sections, not less. People found that cal care saying that utilization rates are counterintuitive because their belief was Region: So there, too, the economic in- much lower in Minnesota than they are the reason the doctors are doing C-sec- centives mattered. And then there’s the in Florida, for instance, but people don’t tions is to avoid liability. Chinese study—a totally different cul- live longer in Florida, even though they ture, a very different health care system. get extra care. Region: The conventional wisdom, right? Currie: Well, yes, but economists think Region: The Dartmouth research [online Currie: Yes, but on the other hand, if that people are the same everywhere, at dartmouthatlas.org/]. you’re doing too many C-sections and right? In some fundamental sense. SEPTEMBER 2012 10 The Region In China, you don’t go to the doctor, tions in that study, with, for instance, very striking. The person comes in and you go to the hospital. Everybody’s treat- patients offering gifts to the doctor or gives this really trivial gift. We have a ed on an outpatient basis. Also in China, clearly stating that the doctor’s recom- picture of it. It’s this funny pen with a hospitals are financed largely from drug mendation would not influence what little “Hello Kitty” or something on it. sales. There’s a very strong incentive to they would actually do. The “patient” also makes a little speech sell people drugs. Our study was an ex- about how much they respect doctors, perimental audit where we sent people Currie: Yes, in our initial study, our which perhaps is the real gift involved. complaining of vague symptoms sug- people [the “patients”] just presented In this experiment, the doctors who re- gestive of mild colds or flu to clinics and with these symptoms, and the experi- ceive the pen are less likely to prescribe then kept track of what medicines they mental treatment was that they would antibiotics, and they also spend a lon- were prescribed. say, “I saw on the Internet that you ger time with the patient and generally The results were really kind of hair- shouldn’t give antibiotics for a cough are more attentive. They do respond raising in the sense that none of the people or cold.” That simple intervention re- to that small gift.
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