Cato Studies

May/​June 2019 • Policy Report

Opioid overdose deaths have risen dramatically in the United States over the past two decades. The standard explanation for this rise blames expanded prescribing and advertising of opioids beginning in the 1990s. In “Overdosing on Regulation: How Government Caused the Opioid Epidemic” (Policy Analysis no. 864), Jeffrey Miron, Greg Sollenberger, and Laura Nicolae find that restrictions on prescribing have the opposite effect. Instead of decreasing opioid overdose deaths, restrictions push users from prescription opioids toward diverted or illicit opioids, which come with a higher risk of overdose.

Regulation and the Opioid Epidemic

Concerns about assimilation and loyalty are among the most frequent objections to liberalizing immigration policy. In “Immigrants Recognize American Greatness:Immigrants and Their DescendantsAre Patriotic and Trust America’s Governing Institutions, ” (Immigration Research and Policy Brief no. 10), Alex Nowrasteh and Andrew Forrester find that immigrants and their descendants express patriotic sentiments and trust inAmerican institutions at levels similar toor higher than other Americans.

Do tax rates have a measurable effect on the quality and quantity of innovation? In “Taxation and Innovation in the 20th Century” (Research Brief in Economic Policy no. 149), authors Ufuk Akcigit, John Grigsby, Tom Nicholas, and Stefanie Stantcheva compile a comprehensive new data set to compare the rate of patent applications versus changes in both state and federal tax policy for both individuals and corporations from 1921–1970. They find economically substantial impacts in how taxes affect the amount, quality, and location of inventive activity.

Religious conservatives are often thought of as anchoring the right wing of American politics, but the reality isn’t quite that simple. In “Religious TrumpVoters: How FaithModerates Attitudes about Immigration, Race, and Identity” (Public Opinion Brief no. 2), Cato’s director of polling, Emily Ekins, finds that on a range of issues, Trump voters who attend church regularly have opinions that are more moderate or left‐​leaning than secular Trump voters.

One of the most remarkable events in human history has been the “mortality transition, ” as morality rates have plummeted and life expectancy has risen dramatically. In “Public Health Efforts and the Decline in Urban Mortality” (Research Brief in Economic Policy no. 150), D. Mark Anderson, Kerwin Kofi Charles, and Daniel I. Rees find that the effect of massive public health programs in the early 20th century has been overstated by recent research. With the exception of water filtration reducing typhoid fever, they find that most of those programs had little observable effect on mortality.

National markets — that is, markets for goods and services that directly compete with each other nationwide — have experienced increasing and controversial levels of concentration, with a smaller number of firms holding rising levels of marketshare. In “Diverging Trends in National and Local Concentration” (Research Brief in Economic Policy no. 151), authorsEsteban Rossi‐​Hansberg, Pierre‐​Daniel Sarte, and Nicholas Trachter find that the opposite trend holds true in local markets. Concentration has been decreasing for coffee shops, grocery stores, and other local services.

Affirmations that employers are “equal opportunity employers” (EEOs) are familiar boilerplate to anybody in the job market. But do those affirmations achieve the desired goal? In “Do Equal Employment Opportunity Statements Backfire?: Evidence from a Natural Field Experiment on Job‐​Entry Decisions” (Research Brief in Economic Policy no. 152), Andreas Leibbrandt and John A. List find a startling and counterintuitive result. In fact, minorities are 30 percent less likely to apply for a job with an EEO statement. Through follow‐​up interviews, the authors find that such statements trigger anticipation of discrimination, stereotyping, and tokenism. For that reason, they actually reduce the willingness of minorities to apply for a job with an EEO statement compared to listings without such statements.

In “Criminal Immigrants in 2017: Their Numbers, Demographics, and Countries of Origin” (Immigration Research and Policy Brief no. 11), Michelangelo Landgrave and Alex Nowrasteh reviewAmerican Community Survey data from the U. S. Census to analyze incarcerated immigrants. The data confirm that all immigrants — legal and illegal combined — are less likely to be incarcerated than native‐​born Americans relative to their shares of the population. By themselves, illegal immigrants are also less likely to be incarcerated than native‐​born Americans.

One of the main explanations for why minimum wage increases don’t always produce the negative effect on employment predicted by standard economics is that higher wages prompt workers to spend more time and effort on searching for jobs, ultimately producing more productive matches. In “The MinimumWage and Search Effort” (Research Brief in Economic Policy no. 153), Camilla Adams, Jonathan Meer, and Carly Will Sloan find that while minimum wage increases do yield significant increases in worker search effort initially, those effects are transitory and do not persist over time.

Until very recently, sports betting was banned in most states by a federal law, theProfessional and Amateur Sports Protection Act (PASPA). Last year, however, the Supreme Court ruled in Murphy v. NCAA that PASPA was unconstitutional, leaving states free to adopt their own policies. In “Anyone’s Game: Sports‐​Betting Regulations after Murphy v. NCAA (Legal Policy Bulletin no. 4), Patrick Moran looks at how states have responded to this decision and recommends that Congress stay out of their way and avoid imposing any new federal regulations, taxes, or fees.

Innovation is the main engine for economic growth, but we know relatively little about the impacts of various policies on innovation. In 2002, a Chinese tax reform provided a rare natural experiment because it applied only to firms started after January 1 of that year. In “The Impact of Corporate Taxes on Firm Innovation: Evidence from the Corporate Tax Collection Reform in China” (Research Brief in Economic Policy no. 154), Jing Cai, Yuyu Chen, and Xuan Wang find a strong and robust causal relationship between tax rate and firm innovation.

Should a bank’s shareholders be on the hook for its liabilities? The lack of such liability is a common complaint from those who see it as encouraging excessive risk. In “Reducing Moral Hazard at the Expense of Market Discipline: The Effectiveness of Double Liability before and during the Great Depression, ” (Research Brief in Economic Policy no. 155), Haelim Anderson, Daniel Barth, and Dong Beom Choi examine the double liability policy, which once held bank shareholders liable in addition to the bank itself. They find that double liability backfired, weakening market discipline more than it incentivized prudential risk taking.

Advocates of legal and recreational marijuana have long pointed to a substitution effect whereby marijuana can provide a better alternative for treating pain than opioids. In “The Impact of Cannabis Access Laws on Opioid Prescribing” (Research Brief in Economic Policy no. 156), Benjamin McMichael, R. LawrenceVan Horn, and W. Kip Viscusi present the most accurate picture to date of the effect of cannabis access laws on prescription opioid use. They find robust and substantial reductions in opioid prescriptions associated with the adoption of both medical and recreational marijuana legalization, a crucial finding as policymakers continue to debate responses to the opioid epidemic.

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