Ep. 88: Understanding international approaches to drug pricing
Release Date: 06/11/2025
Ep. 102: The economics of sanctioning a petrostate
AEA Research Highlights
In response to Russia’s 2022 invasion of Ukraine, the G7 imposed a price cap of $60 per barrel on all Russian oil carried by tankers owned, insured, or serviced by Western companies. Many analysts expected the policy to backfire, with warning that oil could reach $380 if Russia retaliated by cutting production. In a , authors , , and argue that tightly enforced caps can actually raise oil output and push world prices down when factors like market power, uncertainty, and financial constraints are accounted for. Rachel and Wolfram recently spoke with Tyler Smith about why the...
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Ep. 101: Views on the dollar shortage controversy
AEA Research Highlights
In the fifteen years following the end of World War II, Western Europe's capital account surpluses were not sufficient to finance its trade deficit with the United States. Charles Kindleberger of MIT, who helped assemble the , defined this gap as the "dollar shortage" and argued that it was a structural problem rooted in Europe's lagging productivity, one that could only be fixed by sustained US lending. Milton Friedman disagreed, treating the shortage as a simple consequence of overvalued fixed exchange rates that floating currencies would correct. The argument continued through scores of...
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Ep. 100: Environmental market design
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Since the 1990s, developers in Florida who want to build on wetlands have been required to buy offset credits from "wetland mitigation banks," private restoration projects that convert degraded land, often former pasture, back into functioning wetland elsewhere in the same region. Like other environmental offset markets, the program has proved controversial. In a , authors and found that wetland offsets generated roughly $2.4 billion in private gains from trade but also a significant increase in overall flood damage because wetlands were moved away from places where they protected...
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Ep. 99: The wrong side of the tracks
AEA Research Highlights
The place where a child grows up in America shapes their economic future to a . One long-suspected explanation is racial segregation, but proving whether segregation actually causes worse outcomes—rather than just correlating with them—has been challenging for economists. In a , authors , , and provide evidence that racial segregation shapes the long-run economic prospects of American children. Using the placement of railroad tracks in the 19th century, they found that a one standard deviation increase in segregation—roughly the gap between Minneapolis and Philadelphia—cost...
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Ep. 98: Delivering clean water
AEA Research Highlights
More than two billion people around the world do not have safe drinking water at home. Piped water infrastructure remains out of reach for much of the developing world, and cheaper alternatives like chlorine tablets have low take-up rates even when given away for free. In a , authors , , and explore a third option. Working with a private company in rural Odisha, one of India's poorest states, the researchers ran a randomized experiment across roughly 60,000 households to test the effectiveness of delivering treated water directly to people's doors. Burlig recently spoke with Tyler...
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Ep. 97: A short history of Asian immigration
AEA Research Highlights
Asian Americans are the fastest-growing racial group in the United States and are on track to become the largest immigrant group by 2050. Yet, researchers have devoted much less attention to this population than to other immigrant groups. In a , author helps to fill that gap. She traces Asian immigration to the United States across three policy eras—1882–1943, 1943–1965, 1965–present—and explores how they affected the characteristics of those admitted, where they settled, and what work they were allowed to do. Postel recently spoke with Tyler Smith about the origins of...
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Ep. 96: W. E. B. Du Bois and the history of marginalism
AEA Research Highlights
W. E. B. Du Bois is remembered as a civil rights leader, sociologist, and author of The Souls of Black Folk. But before he became famous for his empirical studies of Black life in America, Du Bois was a graduate student at Harvard studying cutting-edge economic theory. In 1891, at age 23, he submitted a 158-page manuscript entitled to a Harvard prize competition. The manuscript sat in the Harvard archives for over a century, largely unexamined by trained economists. Author recently requested that Harvard digitize the manuscript so that he could analyze its contents. In a , he explores...
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Ep. 95: Diversifying college applications
AEA Research Highlights
Guidance counselors generally advise college applicants to diversify their applications across schools they believe to be safeties, matches, and reaches. Yet, prevailing economic theories of school choice suggest that such hedging strategies are suboptimal and that applicants should focus on applying to the best schools they have a chance of getting into. In a , authors and show how incorporating correlations among admissions decisions rationalizes the motive to hedge. Their findings highlight the tradeoffs applicants face under realistic assumptions and may offer insights into the...
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Ep. 94: Targeted supply-side enforcement in the controlled substance market
AEA Research Highlights
Between 1997 and 2011, opioid dispensing in the United States more than tripled, fueling what would become the deadliest drug epidemic in American history. This surge in the supply of opioids was concentrated among a small subset of doctors: roughly 1 percent of the doctors who prescribed opioids accounted for almost 50 percent of all domestic opioid doses prescribed. In a , author examined what happened when federal authorities cracked down on "rogue" doctors who overprescribed opioids. He found that removing a single doctor from the opioid supply chain reduced county-level...
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Ep. 93: Technological spillovers
AEA Research Highlights
The launch of Sputnik by the Soviet Union in October 1957 led to a geopolitical crisis that reshaped American science policy. Within months, Congress established NASA, and by 1961, President Kennedy committed the nation to landing a man on the moon before the decade's end. The resulting investment was massive, and the program still serves as a model of government spending for advocates of public R&D. In a , authors and question whether the space race program succeeded as an economic policy that boosted economic growth and productivity. To estimate the space program's effects...
info_outlineDrug prices have become a hot-button issue in the United States, with politicians across the spectrum agreeing that American consumers pay too much for prescription medications. But bringing down drug prices raises fundamental economic challenges that affect innovation, access, and healthcare costs worldwide.
In a paper in the Journal of Economic Perspectives, author Margaret K. Kyle examines how different countries approach pharmaceutical pricing regulation and the lessons to be learned from international experience. Her work reveals that while the United States does pay significantly higher prices for drugs, the story is more nuanced than a simple comparison suggests.
Kyle recently spoke with Tyler Smith about why economists generally support market solutions but make an exception for pharmaceuticals, how "pay-for-performance" contracts and subscription pricing models could bring down costs, and why simple solutions like copying other countries' prices might backfire.