RAND Corporation Finance Assingment Help With Solution

In the 1970s, researchers at the RAND Corporation conducted a social experiment to investigate the relationship between health insurance coverage and health care utilization. In this experiment, samples of individuals were induced to trade their normal insurance policies for new RAND policies that offered various coinsurance rates (i.e., different rates at which the insurance would reimburse the individual for health care expenses). In 1993. the Clinton administration used the results of the RAND experiment to predict how health care utilization would increase if insurance coverage were made universal. What problems might arise in using the social experimentation results to predict the impact of universal coverage?

A researcher conducts a cross-sectional analysis of workers and finds a positive correlation between time spent on a computer at work and wages. The researcher concludes that computer use increases wages and advocates a policy of computer training for all children. What is a possible problem with this analysis?

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In an ankle on how exercise improves health, the New York nines reported on an observational study that found that each hour spent running added two hours to a person's life expectancy [Brady. 2006]. A week later, a letter to the editor questioned whether the results really proved anything about the impact of exercise on health, and suggested that the study could just as well be showing that “those with a strong heart and good health are otherwise more likely to enjoy running and do it more regularly.” How does this challenge to the exercise study relate to the problems faced by economists trying to assess the causal effects of economic policy? How could you design an experimental study to estimate the impact of running on life expectancy?

In 2006, President George W. Bush proposed a cut in marginal income tax rates. Explain why it is difficult to predict the impact of such a tax cut upon labor supply on the basis of theory alone. If there were no political or legal impediments to doing so, how could you design an experimental study to estimate the impact of lower marginal tax rates on labor supply?

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