James J. Heckman

On Wednesday, July 14, University of Chicago professor and Nobel laureate James J. Heckman spoke at an AEI roundtable discussion called "The Economic Case for Investing in the Cognitive and Soft Skills of Disadvantaged Young Children." Heckman presented research on the effectiveness of early interventions in promoting skill development among disadvantaged children. He argued that the economic returns associated with investments in early childhood development are greater than those for later investments. He also presented evidence that many "soft skills" developed early in life are important determinants of long-term economic and health outcomes, suggesting some new directions for early childhood policy. Joining the discussion were Chester Finn Jr. (Thomas B. Fordham Institute), Grover Whitehurst (Brookings Institution), and John Easton (Institute of Education Sciences), among others.

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At this AEI Book Forum, Arizona State University economist Richard Rogerson discussed the findings in his new book, The Impact of Labor Taxes on Labor Supply (AEI Press, May 2010). Joining Rogerson in the discussion were Harvard University’s Robert J. Barro and Boston University’s Laurence Kotlikoff. [READ MORE]

Harvard economist Robert J. Barro will discuss whether the government's enactment of the first stimulus package has reduced or increased private spending, whether public-sector hiring has lowered or raised private hiring, and whether an additional stimulus package should be enacted. He will explain his recent research, which shows that, over five years, an extra $600 billion in public spending deters $900 billion in private spending. [READ MORE]

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Overspending on Multisource Drugs in Medicaid
By Alex Brill
AEI Working Paper, July 2010

Policymakers and academics have become increasingly aware of wasteful spending within the Medicaid program through the purchase of costly brand products over equivalent generic substitutions. In this working paper, Alex Brill (AEI) analyzes a large subset of 2009 Medicaid drug data from the Medicaid Drug Rebate Program and identifies a number of drugs for which there are significant cost differences between the brand and generic versions. His results estimate a $271 million loss as a result of failing to substitute generic for brand-name drugs. Had Medicaid fully substituted brands for generics total spending could have been reduced from $1.76 billion to $1.49 billion. In light of rising pressure on states’ fiscal budgets these findings corroborate previous evidence of wasteful spending in Medicaid as a growing problem that requires prompt action by policymakers. [READ MORE]

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AEI's Alex J. Pollock writes that rather than postponing reform for Fannie Mae and Freddie Mac, the Democratic Party should follow the lead of Andrew Jackson, who confronted the government sponsored enterprise issue of his day by disbanding the Second Bank of the United States. [READ MORE]

AEI's Andrew G. Biggs and the Heritage Foundation's Jason Richwine argue that even after accounting for numerous controls including education, race, and gender, there remains a 12% federal wage premium, suggesting that combined with the generosity of federal benefits, total compensation for federal workers could exceed that of similar private employees by over $14,000. [READ MORE]

The Battle Over Battle Fatigue
By Sally Satel
Wall Street Journal, July 17, 2010

The diagnosis of Post Traumatic Stress Disorder (PTSD) has grown alongside a new sensitivity to the causes and consequences of being afflicted with it. AEI resident scholar Sally Satel warns that broadening the diagnosis of PTSD to include the anxious anticipation of a traumatic event that never materializes will reduce the credibility assigned to the stressor itself and place a heavier burden on personal vulnerability. Veterans can attain a higher prospect of meaningful recovery through quality, personalized treatment and rehabilitation rather than a broad diagnosis of PTSD. [READ MORE]

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AEI Press, October 2009

In this monograph published in the fall of 2009, Paul L. Joskow, president of the Alfred P. Sloan Foundation and professor of economics at the Massachusetts Institute of Technology, argues that the crisis in the financial market should not become an excuse for reversing beneficial regulatory reforms in other sectors. Indeed, the financial crisis presents a valuable opportunity to evaluate a broad range of regulatory reform options and make reasoned decisions about their rightful application to financial products and markets. [READ MORE]

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Photos: iStockphoto/dra_schwartz, U.S. Army/Department of Defense, and AEI.