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The economics of 5 big election issues

By Chris Miller

As the November 2022 election draws near, a few issues have emerged as the ones most likely to drive voters to the polls. At the top of the list, surprising no one who has read the news in the last year, are inflation and abortion. But voters also have their eyes on many other issues, including education, health care, and climate change.

Recent analysis by experts in Brookings’ Economic Studies program has unpacked the economics of these issues, focusing on practical policy solutions rather than politics. Below, read short summaries of the latest research on these important topics and follow the links to learn more.

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Inflation

  • How does the government measure inflation?
    • Bottom line: To calculate the Consumer Price Index (CPI), the most widely cited measure of inflation, the Bureau of Labor Statistics looks at the national costs of 80,000 items in a fixed basket of goods and services, explain Nasiha Salwati and David Wessel. In a June blog, they detail the applications of the CPI, along with Core CPI, PCE, and other important inflation measures.
    • Learn more: Measuring the cost of housing, which accounts for about a third of the CPI basket of goods, is especially difficult. See this explainer from Sophia Campbell and Wessel for a closer look.
  • Inflation during the COVID era
    • Bottom line: A recent Brookings Papers on Economic Activity study found that the Federal Reserve may have to push unemployment much higher than it originally projected in order to return inflation to its 2% target.
    • Learn more: Listen to episode two of the Brookings Podcast on Economic Activity for an interview with Laurence Ball of Johns Hopkins University, one of the authors of the new study.
  • Key Takeaways from recent CPI reports
    • Bottom line: The last several months have seen one disappointing Consumer Price Index report after another, with hopes of seeing Federal Reserve interest rate hikes translating into slower inflation going unrealized. Brookings experts have convened on Twitter following each of the last four Bureau of Labor Statistics releases to break down the numbers.
    • Learn more: Read four key takeaways on the September report.
  • How a new EU-US trade agreement could reduce inflation
    • Bottom line: A free trade agreement like the one pursued during the Obama administration would lower prices, write Sanjay Patnaik and James Kunhardt of the Center on Regulation and Markets, while at the same time mitigating a recession and strengthening democracy.
    • Learn more: In a recent report, Patnaik and Kunhardt detail the benefits of such a plan and outline a path forward.
  • What if the Fed’s battle on inflation triggers a recession?
    • Bottom line: As concerns about recession were rising in April 2022, the Hutchins Center on Fiscal and Monetary Policy and the Hamilton Project published a book focused on lessons from the COVID-19 pandemic and how to prepare for the next economic downturn. In May, Wendy Edelberg and Mitchell Barnes of the Hamilton Project published an inflation-related update to that work, highlighting early evidence that service prices had overtaken goods prices as a key inflationary pressure and that wages were failing to keep up.
    • Learn more: “Recession Remedies” looks at the various fiscal and monetary responses to the pandemic-induced recession and identifies which should be repeated to support workers and households in the next recession and which were pandemic-specific.
  • Rising costs with limited choices
    • Bottom line: Just as inflation was picking up speed this summer, the Supreme Court voted to overturn Roe v. Wade, meaning that parents choices on when to have a child will be limited in many states. New calculations by Isabel Sawhill and Morgan Welch found that due to higher inflation, a middle-income married family with two children will now spend $26,011 more than previously estimated to raise a child.
    • Learn more: In August, Sawhill, Welch, and Chris Miller explained the new calculation and highlighted reforms to help parents.

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Abortion

  • The economics of abortion
    • Bottom line: Prior to the overturning of Roe v. Wade, Caitlin Knowles Myers and Morgan Welch summarized an amicus brief to the Supreme Court of the United States on the economics of abortion restriction, which reviewed an extensive body of economic literature that shows how abortion access affects women’s education, earnings, careers, and the subsequent life outcomes for their children.
  • States that would limit choice don’t provide as much support for kids
    • Bottom line: Using national data on child well-being and state spending, Isabel Sawhill and Morgan Welch showed that states where abortion bans are likely or are already in effect tend to provide less funding for kids and have worse outcomes for children.
    • Learn more: “The states where children are more likely to be born into the worst circumstances, and are receiving the least support after birth, also tend to be the ones that are restricting a women’s right to choose,” write Sawhill and Welch.
  • Without Roe, women need more access to family planning services
    • Bottom line: Many of the states expected to restrict abortion access also have high unplanned pregnancy rates and low contraceptive use. Research summarized by Morgan Welch and Ember Smith shows that access to family planning, whether it be contraception or abortion, has positive effects on women’s long-term outcomes by allowing them to determine whether, when, and under what circumstances to start or grow their families.
    • Learn more: Welch and Smith highlight research on the impacts of abortion restrictions and policies that could help to mitigate them.

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Climate

  • Permitting reform could help enable the clean energy revolution
    • Bottom Line: The federal permitting process for energy projects is complex, cumbersome, and slow, as Rayan Sud and Sanjay Patnaik document in their recent report explaining the process. Biden’s ambitious clean energy goals, which would require significant clean energy infrastructure investments, have created a renewed sense of urgency to those efforts, write Sud and Patnaik.
  • Modeling can help policymakers prepare for a changing climate and a changing economy
    • Bottom Line: To manage the uncertainty and complexity of a changing climate and its impacts, economists and climate researchers rely on complex models and scenarios. Roshen Fernando, Weifeng Liu, and Warwick McKibbin explain the different types of scenarios and key takeaways from recent scenario exercises.
    • Learn More: “…to effectively use scenarios, policymakers need to understand how scenarios are developed and the strengths and weaknesses of the different modelling approaches,” they write in their latest report.
  • Jobs for a post-carbon economy
    • Bottom line: Workers who depend on fossil fuels for a living will have to transition to new livelihoods as the economy increasingly adopts green energy. “Just transition” programs have emerged as a useful way to help them accomplish that change, according to Michaël Aklin and Johannes Urpelainen.
    • Learn more: In a recent report, Aklin and Urpelainen make the case for national-level support of just transition programs, including the creation of a federal Just Transition Office to coordinate the effort.
  • The economic risks of climate change
    • Bottom line: Climate disasters cost the U.S. $95 billion in damages in 2020 alone, and as a result, Sanjay Patnaik explains that climate risk is becoming an increasingly important factor in political and economic decision making.

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Health care

  • Eliminating small premiums could increase insurance coverage
    • Bottom line: Research has shown that premiums of even a few dollars a month can markedly reduce health insurance coverage, likely because of the hassles involved in paying even a small premium. In a recent report, Matthew Fiedler estimates that increasing the premium tax credit to cover an enrollee’s full premium, in cases where the enrollee would otherwise owe a small residual premium, could have increased insurance coverage in the states that use the HealthCare.gov enrollment platform by 48,000 person-years in 2022.
    • Learn more: Fiedler breaks down the numbers and explains the proposal.
  • The FDA could do more to promote pharmaceutical competition
    • Bottom line: A report published by the USC-Brookings Schaeffer Initiative for Health Policy argued that with only modest statutory changes, Congress could give Food and Drug Administration authorities that would help promote generic pharmaceutical drugs and price competition.
    • Learn more: These changes could have been enacted through the Prescription Drug User Fee Act reauthorization, according to the June report.
  • Five things to understand about pharmaceutical R&D and innovation
    • Bottom line: In a recent blog, Richard Frank and Kathleen Hannick reveal key facts on drug development, including using recent data to show that there is only a modest relationship between R&D spending and the supply of new drugs.
    • Learn more: In relation to pharmaceutical company spending on research and development, “modest changes in the size of payments to the pharmaceutical industry would likely have little impact on the future health of Americans,” write Frank and Hannick.
  • Biden’s plan for mental health builds on long-standing efforts
    • Bottom line: In his first State of the Union address, President Biden proposed changes to how America treats mental health. His proposal would establish mental health as a key component of the nation’s health care system, improving mental health treatment for the youth, advancing equity goals in mental health care, and more, explain Richard G. Frank, Vikki Wachino, and Karina Aguilar in this blog from April.
  • A “critical product list” for health care could help prevent public health crises
    • Bottom line: The baby formula shortage earlier this year showed that the supply chain’s effect on health is not limited to pandemic-level crises. Adding key products like baby formula and psychotropic medications to the FDA’s critical product list would boost supply chain resilience and help prevent future crises, according to analysis by Marta E. Wosińska and Richard G. Frank.
    • Learn more: Read the blog by Wosińska and Frank for more on how the critical product list could be amended.

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Education

  • How to help boys who have been left behind in education
    • Bottom line: Young women are more likely than their male counterparts to have a bachelor’s degree, are more likely to graduate high school on time, and perform substantially better on standardized reading tests than boys. Richard Reeves and Ember Smith explore the state level data in a recent blog.
    • Learn more: One of the solutions highlighted in Reeves’ new book, “Of Boys and Men,” is to give boys across the country the option to “red shirt,” or delay starting kindergarten by a year.
  • How the racial wealth gap affects college access
    • Bottom line: The formula that determines how much federal financial aid is offered to prospective college students does not account for primary residency home equity or retirement savings. That means those who hold those assets receive an implicit subsidy for college, write Phil Levine and Dubravka Ritter, and white families hold those assets at a higher rate than Black families. Among families whose children are likely to benefit from this provision (those with middle to high incomes, typical counted assets, and sufficient remaining financial need to qualify for grant-based aid), white students receive an implicit subsidy that is $2,200 per year, on average, more than for Black students.
    • Learn more: Read the blog for a breakdown of Levine and Ritter’s calculations and proposals to solve the problem. For more on improving college affordability, see Levine’s analysis which shows that doubling the Pell Grant is a more targeted approach than a proposed “Free College” program and would do more to close the college affordability gap.
  • Student loan debt forgiveness benefitted those who needed help, and those who didn’t
    • Bottom line: A White House fact sheet explained that student loan debt forgiveness aimed to target relief on low- and middle-income borrowers—particularly Black borrowers, borrowers who didn’t get a degree, and those who have defaulted on their student loans. However, by calculating the full cost of the relief based on average repayment rates for different groups, Adam Looney found that “the administration spent roughly the same amount per borrower on Pell Grant recipients as it did on other borrowers, even though Pell grant recipients are from much more disadvantaged backgrounds.”
    • Learn more: Looney also recently offered critiques of the Biden administration’s plan to restructure the Income-Driven Repayment program for student loan borrowers – read more here.
  • The cost of out-of-state college
    • Bottom line: The share of out-of-state students at public, state flagship universities has risen by an average of 55% since 2002, according to recent analysis by Aaron Klein. “By swapping in-state students for out-of-state students, writes Klein, “universities gain more revenue. The result is more debt for students, higher costs for parents, and no greater educational attainment for society.”
    • Learn more: Use the interactive map to explore changes in in-state/out-of-state enrollment in each state.

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The Brookings Institution is financed through the support of a diverse array of foundations, corporations, governments, individuals, as well as an endowment. A list of donors can be found in our annual reports published online here. The findings, interpretations, and conclusions in this report are solely those of its author(s) and are not influenced by any donation.

      

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