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Organizational Failure and Government Transfers: Evidence From an Experiment in the Financing of Mental Health Care

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  • Richard G. Frank
  • Martin Gaynor

Abstract

This paper makes use of a unique "natural experiment" in the design of intergovernmental grants. The State of Ohio has dramatically altered the method by which local public mental health care is financed. The manner in which the grant mechanism has been altered allows for the estimation of income compensated subsidy responses of local governmental entities. The empirical results indicate strong responses to the "new" incentives suggesting a direction for policy makers for dealing with some of the most vexing problems in mental health policy.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3923.

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Date of creation: Dec 1991
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Publication status: published as "Organization Failure and Government Transfers: Evidence From an Experiment in the Financing of Mental Health Care,"Journal of Human Resources, vol.2 9, no.1, pp.108-125, winter 1994.
Handle: RePEc:nbr:nberwo:3923

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  1. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers, C.V. Starr Center for Applied Economics, New York University 89-18, C.V. Starr Center for Applied Economics, New York University.
  2. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, Econometric Society, vol. 46(6), pages 1251-71, November.
  3. Inman, Robert P, 1982. "The Economic Case for Limits to Government," American Economic Review, American Economic Association, American Economic Association, vol. 72(2), pages 176-83, May.
  4. Breusch, T S & Pagan, A R, 1980. "The Lagrange Multiplier Test and Its Applications to Model Specification in Econometrics," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 47(1), pages 239-53, January.
  5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  6. Holmstrom, Bengt R. & Tirole, Jean, 1989. "The theory of the firm," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 2, pages 61-133 Elsevier.
  7. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
  8. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, Elsevier, vol. 5(2), pages 129-151, June.
  9. Courant, Paul N. & Rubinfeld, Daniel L., 1981. "On the welfare effects of tax limitation," Journal of Public Economics, Elsevier, Elsevier, vol. 16(3), pages 289-316, December.
  10. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 18(3), pages 617-43, December.
  11. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc.
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