Christina Marsh Dalton

Assistant Professor

Department of Economics
Wake Forest University

Research Interests

Health Economics
Industrial Organization
Applied Econometrics

Contact Information

204B Kirby Hall
Department of Economics
Winston-Salem, NC 27109
Phone: (336) 758-4495
tina.marsh.dalton@gmail.com

Academic CV

CV for Public Talks

I have moved from the University of Georgia to Wake Forest University.


Why Do Firms Use Insurance to Fund Worker Health Benefits? The Role of Corporate Finance (with Sarah Holland), March 2017 Journal of Risk and Insurance , forthcoming [PDF]

When a firm offers health benefits to workers, it exposes the firm to the risk of making payments when workers get sick. A firm can either pay health expenses out of its general assets, keeping the risk inside the firm, or it can purchase insurance, shifting the risk outside the firm. Using data on insurance decisions, we find that smaller firms, firms with more investment opportunities, and firms that face a convex tax schedule are more likely to hedge the risk of health benefit payments. We show how firms trade of the benefits that come from financing and investment characteristics with the costs of regulation when choosing insurance.

Cost versus Control: Understanding Ownership Through Outsourcing in Hospitals (with Patrick Warren), Journal of Health Economics, Vol 48, July, pp 1-15. 2016 [PDF]

For-profit hospitals in California contract out to a much greater extent than either public hospitals or private nonprofit hospitals. To explain why, we build a model in which the outsourcing decision is a trade-off between net revenues and "quality", any factor of interest to the hospital manager over-and-above its impact on net-revenues. Since nonprofit firms must consume profits indirectly through perquisites, they trade off differently from for-profit firms. This difference is exaggerated when "quality" is particularly important or the firm is hit with a favorable fixed-cost shock. We test these predictions in a panel of California hospitals, finding evidence for each. These results suggest that a model of public or nonprofit make-or-buy decisions should be more than a simple relabeling of a model derived in the for-profit context.

Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis (with Patrick Bajari, Han Hong, and Ahmed Khwaja), RAND Journal of Economics, Vol. 45, No. 4, pp. 747-763, 2014. [PDF]

Honorable Mention: 23rd Arrow Award for best paper in health economics, iHEA 2015.

Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by a using unique data set with confidential information from a large self insured employer to estimate a structural model of the demand for health insurance and medical care. We propose a two-step semi-parametric estimation strategy that builds on the work on identification and estimation of auction models. We find significant evidence of moral hazard and adverse selection.

Estimating Demand Elasticities Using Nonlinear Pricing, International Journal of Industrial Organization, Vol. 37, pp. 178-191, 2014. [PDF]

(Previous version: Estimating Health Expenditure Elasticities Using Nonlinear Pricing, November 2009)
Step-by-step directions and code for implementing the estimation method [Code]
Stata ado-file [locpolyslope]

Nonlinear pricing is prevalent in industries such as health care, public utilities, and telecommunications. However, nonlinear pricing in these sectors causes bias when estimating elasticities for welfare analysis or policy changes. This paper develops a local elasticity estimation method that takes advantage of nonlinear price schedules to isolate consumers' expenditure choices from selection and simultaneity biases. This method improves over previous approaches because it uses commonly-available observational data and requires a single general monotonicity assumption. Using detailed claims-level health insurance data with two nonlinearities, this paper measures declining elasticities from -0.26 to -0.09 along initial expenditure ranges, in contrast to previous work which aggregates over a skewed spending distribution. These estimates are then used to calculate moral hazard deadweight loss. This method enables estimation on many policies with nonlinear pricing which previous tools could not address.

Myopia and Complex Dynamic Incentives: Evidence from Medicare Part D (with Gautam Gowrisankaran and Robert Town), Revise and Resubmit [PDF]

Standard Medicare Part D drug insurance provides limited coverage in a "donut hole" region, making the purchase problem dynamic. We develop a discontinuity-based test for myopia using enrollees who arrived near the coverage gap early in the year. We find that there are fewer and cheaper purchases immediately after reaching the gap, providing evidence in favor of myopia. We structurally estimate a dynamic drug purchase model and find complete myopia. For a nationally representative sample, "behavioral hazard" increases enrollee spending by 41%. Entirely eliminating the gap would increase insurer spending 31%, compared to 6% for generic-only gap coverage.

Better Together: Coexistence of For-profit and Nonprofit Firms with an Application to the U.S. Hospice Industry (with W. David Bradford), Under Review [PDF]

Although nonprofit dominance is commonly studied, some markets maintain a mix of both nonprofit and for-profit firms. This is puzzling; if firms serve the same market, why isn't one optimal ownership chosen? In this paper, we show that the coexistence of nonprofit and for-profit firms can lead to a greater diversity of consumer types being served, even if both firms merely act as a profit-maximizers. Each ownership type specializes and divides the breadth of consumer types between themselves. We show this is the case for a market where firms serve consumers for multiple consumption durations, but where charitable donations are part of a nonprofit firm objective function and happen after services have been provided. This is especially true if the value of the good or service may be nonexcludable beyond the immediate consumption or direct consumer. We examine this empirically for the hospice industry, using data on over 90 percent of freestanding U.S. hospices 2000-2008. We show that nonprofit and for-profit providers split the patient market according to length of stay and provide evidence that participation of both ownership types leads to a wider range of patients being served.

Working Papers:

The Effect of Urban Resident Basic Medical Insurance on Household Consumption (with Gordon Liu and Fei Xu), December 2012

Changing from an export-driven growth mode to a more stable domestic consumption orientation is a priority for many emerging economies, notably China. After exports were seriously disrupted by the world financial crisis in 2008, China's policy makers are increasingly interested in boosting domestic consumption to promote sustainable economic growth. This paper examines the role of introducing health insurance to economic growth. Protecting urban residents from unexpected medical expenditures could reduce income uncertainty of urban households and consequently increase their current consumption. Using a new, detailed longitudinal household survey, we analyze the effects of the introduction of Urban Resident Basic Medical Insurance (URBMI) on household consumption in urban China. Our difference-in-differences estimates show that participating families increase annual non-medical consumption by about 13%. The largest component of the consumption increase is for education expenses, which is an additional benefit of introducing insurance to developing countries seeking to improve their human capital advantage. URBMI increases non-medical consumption the most for low-income families, by over 20%.

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