Casey B. Mulligan is an economics professor at the University of Chicago.

Benefit payments by government safety net programs, like unemployment insurance, help the people who receive those payments. But government officials, politicians and journalists sometimes go another step and assert that everyone benefits when the poor and unemployed receive payments from the government, because that “puts money in the hands of consumers,” and consumer spending is said to stimulate employers to hire.

Today’s Economist

Perspectives from expert contributors.

I explained last week that the “hands of the consumer” theory ignores the hands of the people who pay for safety net benefits. For example, because of the extra taxes needed to help pay for the unemployment insurance program, a taxpayer may no longer be able to afford to make an addition to his house.

Thus, while jobs will be needed to serve the unemployed people as they spend their benefit payment, there will be no need for the construction workers and others who would have helped with the taxpayer’s home project.

Dean Baker of the Center for Economic Policy and Research disagreed, in a post on the center’s Beat the Press blog, saying that, for now, unemployment insurance benefits do not cost us anything because they are not financed with current taxes:

At the point in a business cycle where large numbers of people are receiving benefits (like now) the U.I. system will be running a deficit. This allows unemployed workers to receive benefits, which they will overwhelmingly spend, without an offsetting current payment from other workers.

I agree that unemployment benefits and other safety net benefit payments are many times financed with taxes in the future or taxes in the past. But that “financing channel” still does not make the payments free from the perspective of today’s economy.

Suppose the government has been borrowing the money to pay for unemployment benefits. It borrows money by selling bonds. The purchasers of those bonds have less to spend on something else.

As I explained last week, government borrowing to pay for safety net benefits may increase consumer spending and reduce investment spending, because it does put money in the hands of consumers.

But that could either increase or reduce employers’ need to hire, depending on, among other things, whether the consumer goods purchased are more or less labor-intensive than investment goods not purchased (see last week’s discussion of liquidity considerations).

Last week I noted that I was holding constant the amount that safety net beneficiaries (“the poor”) work and earn, so that more safety net income for the poor means more total income for them, which permits them to spend more. But the safety net causes some beneficiaries, or their spouses, to work less.

Unless the safety net replaces all of the income lost from reduced work time – it typically does not – then the families who reduce their labor in response to the safety net expansion will spend less as a result of the safety net, and the amount less could be many times more than the amount that the safety net expanded.

Now the “hands of consumers” theory is turned on its head: at the same time that the poor spend most of whatever income they have on consumer items, the safety net’s redistribution reduces their total spending because it reduces their total family income.

Benefit payments by government safety net programs help the families who receive those payments. But it is inaccurate to ignore that fact that those payments hurt the rest of us.

Fred R. Conrad/The New York Times

CATHERINE RAMPELL

Dollars to doughnuts.

Does getting beget giving?

Not when it comes to college alumni donations, a new study suggests.

A working paper by Jonathan Meer at Texas AM and Harvey Rosen at Princeton followed a group of about 13,000 alumni who graduated from an unnamed, selective research university between 1993 and 2005. The economists were interested to see whether students who received financial aid went on to donate more money after graduation than classmates who had paid full freight, perhaps as a demonstration of gratitude.

Instead they found that aid recipients were less generous than their peers.

Of the alumni studied, 49.6 percent received need-based financial aid through some combination of scholarships, loans and campus jobs. No students received merit-based aid from the school. About 44.7 percent received some scholarship aid, 40.4 percent received aid in the form of a campus job, and 43 percent received loans. About a third (34.8 percent) of the school’s alumni in the years studied received all three.

The university has a very high alumni giving rate: 62 percent of alumni donate to the school. Alumni who had received a loan, however, were 3.6 percentage points less likely to donate. The size of the loan mattered, perhaps not in the way you might expect: receiving small or large loans reduced the probability of giving, while moderate-sized loans didn’t seem to affect the likelihood of donating much at all.

“While we cannot definitively say what is driving these results, a possible explanation is that the annoyance effect of small loans is diminished by gratitude for moderate amounts of aid, while large loans feel like a burden,” the authors write.

Receiving a scholarship grant — that is, tuition aid that does not need to be paid back — did not have much effect on whether a student went on to donate to the school after graduation. But scholarship recipients who did choose to donate gave less on average than donors who hadn’t gotten scholarships.

As with loans, the size of the scholarship mattered. Students who received bigger grants made bigger donations than counterparts who received smaller grants. This suggests that the “pay it forward” attitude may be at work at least in part.

Receiving work-study aid — that is, aid in the form of a campus job — didn’t significantly affect donation behavior one way or the other.

Three potential factors could explain why loan and scholarship recipients were less likely to give or to give big.

First, students poor enough to receive financial aid might feel alienated when surrounded by so many classmates who could afford to pay the tuition sticker price. Maybe that sense of alienation discouraged them from donating after graduation.

But the donation data came with lists of what extracurricular activities each alumnus participated in during college. This information did not seem to demonstrate that students receiving loans were more alienated than their peers.

A second explanation is that students who come from wealth might have the connections to get higher-paying jobs as alumni, which in turn enable them to give more money.

Unfortunately, the study’s researchers did not have direct income data. They tried to estimate income figures from other information available, like the alumnus’s profession, current ZIP code, college major and number of advanced degrees. As best the economists could tell from these data points, income did not seem to explain why financial aid recipients gave less.

Third, financial aid recipients may be just as generous as their classmates, but they may donate more of their money to other causes, like homeless shelters, religious organizations or even other education-oriented not-for-profits like the United Negro College Fund. The authors didn’t have any data on whether and how much the school alumni gave to other causes, so they couldn’t test this theory.

Whatever the explanation, the bottom line is the same for the school’s fund-raisers, and potentially the annual-giving representatives at similar colleges throughout the country.

While there are many reasons to keep education accessible to students of all socioeconomic backgrounds, the authors write, “universities should not expect that generous financial aid will pay for itself through larger donations in the future.”

Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take.”

It is clear that the rising inequality of wealth and income and how the wealthy should be taxed will be major issues in the political campaign.

Today’s Economist

Perspectives from expert contributors.

All the Republican candidates are committed to at least preventing any increase in taxes on those with large incomes. President Obama is pressing the so-called Buffett Rule that would require those making $1 million a year or more to have an effective federal tax rate (taxes divided by income) of at least 30 percent, while raising the top statutory tax rate for those with incomes over $250,000 to 39.6 percent from 35 percent.

One problem that undoubtedly will arise is how to generalize about any particular income class’s tax burden. As I pointed out last week, tax burdens depend a lot on how one defines “income.” In particular, the tax law makes a sharp distinction between income earned through wages and salaries, sometimes called “earned” income, on the one hand, and income from capital, or “unearned” income.

Wage income is very heavily taxed because both the income tax and payroll tax apply to it. The lower one’s income is, the more likely that it consists solely of wages. Therefore, the heavy taxation of labor necessarily hits hard those with low and middle incomes.

By contrast, income from capital is lightly taxed. Unrealized capital gains are untaxed, realized gains are taxed at a maximum rate of just 15 percent, and gains held until death are never taxed. Moreover, wealthy hedge fund managers are permitted to treat their managerial fees as if they are capital gains, something that is called “carried interest.” Dividends on corporate stock are also taxed at a maximum rate of 15 percent.

The wealthier one is, the less his or her income is derived from labor. According to the Tax Policy Center, households in the middle three quintiles get about 70 percent of their total income from wages and salaries. Those in the top quintile get 55 percent of their income from labor.

For those in the top 1 percent of the income distribution, only about 30 percent of their income comes from labor and for those in the top tenth of 1 percent, just 20 percent of their income comes from labor.

By contrast, those with low and middle incomes derive very little of it from capital. The bottom 80 percent of households get less than 4 percent of their income from capital. For those in the top quintile, however, 16 percent of their income comes from capital. And among the top 1 percent it is 35 percent.

But looking at the data this way understates how low taxes on capital benefit the wealthy, because if one looks only at capital income, virtually all of it goes to them. Those in the top quintile get 86 percent of all the capital income in the United States — $960 billion out of $1.1 trillion in total capital income. Most of that went to the top 1 percent, which received $633 billion — 57 percent of the total. And the top 0.1 percent got two-thirds of that.

The point is that a tax system that lightly taxes capital and heavily taxes labor is necessarily going to benefit the wealthy. As this chart illustrates, federal tax rates on the wealthy have been falling since 1978, when Congress cut the maximum capital gains rate to 28 percent from 35 percent.

Internal Revenue System Statistics of Income 2005, National Bureau of Economic Research and Council of Economic Advisers calculations
The average federal (income plus Federal Insurance Contributions Act) tax rates for a sample of 2005 taxpayers after adjusting for growth in the National Average Wage Index.

We rationalize this mainly on the grounds that increasing the stock of capital is good for everyone. For example, it will raise productivity, which in the long run will raise wages for all workers.

The empirical question of whether sharply lower taxes on capital, and hence the wealthy, has actually raised saving, investment and productivity is one I will revisit. Suffice it to say that since 2003, when the current tax rates on capital gains and dividends were instituted, the economy offers little, if any, evidence on this score. (Before 2003, capital gains were taxed at a maximum rate of 20 percent and dividends were taxed like wages and salaries.)

The point I want to make here is that differential tax rates on different forms of income mean that tax burdens will vary not only between income classes but within them as well. The latest Economic Report of the President has an interesting table that illustrates this point.

United States TreasuryRates shown include income, corporate and payroll taxes.    

For the wealthy, we can see, effective tax rates vary between 12 percent for those at the lower end of the top quintile and 29 percent for those at the upper end. Among the top 1 percent, effective rates vary between 9 percent and 35 percent.

Those paying the highest effective rates are, no doubt, those such as doctors and lawyers with large incomes consisting mostly of salaries.

Thus we see that the bottom tenth of those in the top 1 percent pay well less in federal taxes as a share of their income than at least 25 percent of those in the bottom income quintile. And 25 percent of those in the top 1 percent pay less than substantial numbers of households in the upper three quintiles.

I couldn’t find the raw data underlying that in the table, but the Census Bureau put the floor for households in the second quintile at $20,000 in 2010. For the third quintile, the floor was $38,043; for the fourth $61,735; for the fifth $100,065, and for the top 5 percent $180,810.

We can see, then, that the tax system in the United States violates the fundamental principles of income taxation. Those are “vertical equity,” which says that those with upper incomes should pay a higher effective tax rate than those with modest incomes — as far back as Adam Smith, ability to pay has always been a core principle of taxation — and “horizontal equity,” which says that those with roughly the same income ought to pay roughly the same taxes.

CATHERINE RAMPELL

Dollars to doughnuts.

On Thursday I wrote about how workers view the meaningfulness of their jobs, based on data collected from 30,000 workers by PayScale over the last year. (See caveats on PayScale’s methodology below.) Respondents were asked whether their jobs “make the world a better place,” and were given the options of: “very much so,” “yes,” “a little,” “no” and “My job may make the world a worse place.”

Only about 1 percent of respondents gave that last answer, but I was curious to know exactly who these humanity-destroying 1 percent were. Or at least, what kinds of workers thought they were destroying humanity rather than “doing God’s work.”

At The Times’s request, PayScale looked at the jobs and industries with workers most likely to choose the “worse place” answer. Here are the top 10 occupations that had the highest shares of workers saying they thought their jobs made the world a worse place:

Of the occupations in the PayScale survey, fast-food workers appear to view what they do with the most contempt, since 42.3 percent said their jobs might make the world a worse place.

Take this number with a grain of salt, though, since workers opt into PayScale’s database, rather than being randomly selected. PayScale has said that it regularly compares its data to those from the Labor Department and other sources to make sure its numbers appear accurate and representative. But even so, the types of workers more likely to take part might somehow differ in subtle ways from those who don’t.

The job category with the next highest share of workers believing that their jobs may make the world a worse place was bartenders. It came in a distant second, with 5.8 percent selecting this answer.

Occupy Wall Street may be pleased to find two categories of bankers on the list — investment banking associates and personal bankers — although of course it’s still only a tiny minority of either profession who believe that such jobs might be bad for the world.

I’m frankly surprised that fashion designers made the top 10. I would have guessed that people who work in creative industries would be more likely to believe that their own jobs are meaningful. Perhaps designers have reservations because of the working conditions in some clothing factories abroad, or are concerned about body image issues the fashion industry is often blamed for. (Other theories?)

PayScale also sorted the responses by industry, since workers can have innocuous-sounding job titles but still work in nefarious-sounding industries (for example, a secretary for a hit man). By a wide margin, tobacco manufacturing led the sectors whose workers were most likely to say their jobs might be bad for mankind.

What about you, readers? Do you think your job makes the world a better or a worse place, and why?

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

The government is not literally a mutual fund and insurance company. But in many ways, it operates like one, and greater awareness of the parallels would improve the quality of public debate over public spending.

Today’s Economist

Perspectives from expert contributors.

Most discussions of taxes and benefits treat either one or the other in isolation. This is not helpful. Imagine telling investors what they pay for shares of a company without explaining what they get in dividends or capital gains, or explaining the costs of insurance without specifying the benefits.

What both investors and taxpayers should focus on is the difference between costs and benefits, appropriately discounted to reflect differences in their timing.

But most discussions of taxes focus only on what is paid rather than net taxes (the difference between taxes paid and benefits received). Many focus even more narrowly on federal income taxes, ignoring state and local taxes and Social Security contributions.

Likewise, many discussions of the social safety net describe the benefits that individuals receive without asking what taxes they have paid or will pay in the future. When comparisons are made, as in a fascinating report last week in The New York Times, they are often limited to federal taxes and benefits within programs such as Social Security and Medicare.

But the state and local taxes that individuals pay should also be factored in, especially since they help pay for the education of future workers who will help finance Social Security and Medicare in the years to come.

Most reports that purport to look at net benefits, like one published by the Tax Foundation, simply focus on one point in time. But most public spending in the United States is conditioned on age, not income.

Children are the primary beneficiaries of educational spending. When they grow up and enter paid employment, they typically pay more in taxes than they receive in benefits. Upon retirement, the balance tips the other way.

Net benefits should be defined over an individual’s life cycle, comparing all taxes paid with all benefits received, an approach sometimes referred to as generational accounting.

The economist Laurence Kotlikoff and Scott Burns wrote a popular book on the subject, “The Coming Generational Storm,” in 2004. The basic model outlined in the book, as well as in more scholarly publications, projected unsustainably high net tax rates for future generations and was widely used as a rationale for reducing public commitments to the elderly.

But the definition of net benefits that Professor Kotlikoff and other advocates used excluded the benefits of expenditures on education as well as spending on public goods like highways, environmental regulation and the military and has been criticized on many other grounds.

The most powerful critique, in my opinion, emerges from an alternative estimate of public transfer accounts in the United States published by the economists Antoine Bommier, Ronald Lee, Timothy Miller and Stéphane Zuber that explicitly takes the benefits of public education into account.

Their analysis reveals a much more sustainable intergenerational contract from which most Americans directly benefit. By their calculations, increasing public investments in education have more than offset the increased tax burden of support for the elderly. In other words, benefits received both early and late in life add up to more than the value of taxes paid.

I’ve described a similar way of looking at intergenerational transfers in two earlier posts, one offering a simple estimate of “tax payback year,” calculating how many years it would take average taxpayers to repay the value of public spending on their education and another summarizing research (to which Ronald Lee and Timothy Miller also contributed) on the economic contributions of parents — who, after all, are raising future taxpayers.

None of these estimates settles the debate over what the best level of public spending would be, and none provides the information that taxpayers need to estimate their own net lifetime government benefits, be they positive or negative, at any given point in time.

But these estimates illustrate a basic feature of the Public Mutual Fund and Insurance Company. We pool investments in a very important set of productive assets – the capabilities of the younger generation – and the payoff helps provide for our health and security in old age. Adults have an incentive to invest in public education because public pensions allow them to capture part of the returns.

As we engage in efforts to renegotiate some aspects of this intergenerational contract, voters deserve a better picture of how they are personally affected by it. They also deserve a clear explanation of why and how previous intergenerational accounting efforts have gone awry.

Today, the White House released its annual economic report of the president, a ranging overview of how President Obama and his Council of Economic Advisers view the economy – everything from housing policies to the aging of the workforce to the debt crisis in Europe.

In a call with reporters, Alan Krueger, the chairman of the council, said the recovery had been strengthening even faster than he and other economists expected recently and the report notes that the “sharp drop” in unemployment this winter took them “by surprise.”

For that reason, he said, the report’s forecast of the unemployment rate in 2012 and beyond was out of date, given that it was made in November. But the council did update its estimates of job growth to account for the recovery’s recent strength. It expects the economy to create 167,000 jobs a month in 2012, up from 146,000 a month in 2011.

Mr. Krueger also highlighted some counterintuitive parts of the council’s analysis.

The report stresses the dismal condition of the labor market and anemic job growth during the recovery. But in some ways, Mr. Krueger said, the recession was less severe than economists might have predicted.

“Growth in private nonfarm jobs in the current recovery began nine months after the business-cycle trough,” the report says. “By comparison, payrolls first began expanding consistently 12 months into the 1990–91 recovery, and sustained private-sector job growth in the 2001 recovery did not begin until 21 months after the official end date of the recession.”

Referring to the stimulus bill as well as the extraordinary actions taken by the Federal Reserve, the report adds: “As bad as the Great Recession was, the United States appears to have fared relatively better than other countries that have experienced severe financial crises, in large part because of the emergency actions that were taken to strengthen the economy and stabilize the financial system.”

CATHERINE RAMPELL

Dollars to doughnuts.

The share of American newlyweds in interracial couples has more than doubled in the last 30 years, to 15 percent in 2010 from 6.7 percent in 1980.

That’s according to a new Pew Research Center report, which also looked at how interracial couples compare to same-race couples when it comes to income. On its face, it looks as if couples who married out of their own race are socioeconomically similar to those who married in: in 2008-10, the median combined annual earnings of interracial newlyweds was $56,711, compared with $55,000 for same-race newlyweds.

The numbers vary tremendously, though, depending on the combination of races involved. Here is a list of newlyweds from 2008-2010, sorted by different racial combinations of husbands and wives:

New marriages with an Asian-American groom and a white bride earned the most money, with the median such couple bringing in $71,800 between the two of them. Note, though, that such pairings represent less than 1 percent of all newly married spouses of any racial combination, so the sample size is small.

The converse of that group — new spouses in which the husband is white and the wife is Asian-American — earn almost as much, with a combined median income of $70,952. They are followed by newlyweds who are both Asian, who typically earn $62,000 in total.

So basically, what these numbers are reflecting is that Asians earn more money, period, which is generally true across the population of Asian-Americans and has been the case for a while.

At the bottom of the income list is new marriages in which both spouses are Hispanic. Given the share of Hispanics who are recent immigrants from poor countries, this is probably not surprising.

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

Over the years, both experience and empirical research have taught policy makers around the globe that how money enters the health system – and how much enters – has a powerful influence over the shape and modus operandi of health care delivery.

Today’s Economist

Perspectives from expert contributors.

It is therefore not surprising that “payment reform” has become the new battle cry in the United States, as the nation seeks better control over the annual increases in health spending per capita.

So, what choices do policy makers have in payment reform?

It is useful to go back to basics. Any payment system for health care has several dimensions:

1. The “base” upon which prices are defined and paid.
2. The level of the payment per unit of the chosen base.
3. The administrative and economic process by which that price level is determined.

The chart below focuses on the first and third of these dimensions. The columns describe the main bases in the menu; the rows describe the methods by which price levels are determined. The second dimension — that is, the “right” level of payment — is highly debated. From society’s perspective, economists would define that level as the minimum that must be paid to elicit from the providers of health care the supply of health care goods and services that society wishes to have and is willing to pay for.

By far the most prevalent payment base around the world has been and continues to be the piece-rate method base as fee for services, or F.F.S.

A major advantage asserted for F.F.S. is that it rewards providers of health care in direct proportion to the number and type of services they render — what is called “productivity.” A second advantage is that by its very nature F.F.S. forces the providers of care to describe in detail what services they have delivered to patients. It lays bare what goes on, or at least what is reported to go on, in the provider’s practice.

A major disadvantage of F.F.S. is the strong financial incentives it creates to prescribe for and deliver to patients more health care than may be clinically warranted by best-practice standards.

Furthermore, if the profit margin implicit in the level of a fee for a service and the cost of producing the underlying service varies significantly across services — as in practice it generally does — then these profit margins may distort the mix of services going into medical treatments away from best clinical practice.

Finally, the F.F.S. system enables the much-deplored fragmentation of health care suspected of yielding substandard overall quality of medical treatments and excessive costs.

Bundled payments per episode of illness, the next payment base in the chart, are thought to mitigate the disadvantages ascribed to F.F.S.

The idea here is that expert clinicians use evidence-based, best clinical practices to compose the bundle of distinct goods and services that should go into the treatment of a given medical condition. There should then be one single payment made — the so-called bundled payment — for the entire package of these goods and services. There would, of course, have to be an organization at the receiving end of the payment capable of coordinating the entire treatment and distributing the bundled payment among the various participants in the treatment.

The theory driving bundled payments is that, given the payment, the various providers of health care involved in the treatment of a given medical condition — e.g., a hip replacement or a coronary artery bypass graft — will naturally be driven to seek the most cost-effective treatment package.

By “cost effective” is meant the total cost incurred to achieve a given clinical outcome from a treatment — for example, a change in life expectancy or in “quality-adjusted life years,” known as QALYs (pronounced KWAH-lees). The QALY is a metric based on life expectancy, with each year adjusted by a multiplier ranging from 0, for death, to 1, for perfect health, for the health status experienced in that year (as I discuss in Pages 519-25 of this paper).

An added advantage attributed to bundled payments is that they automatically force our health care delivery system to change from its current fragmented organization toward clinically integrated health care, generally thought to yield health care of superior quality (and often lower costs).

To health-policy analysts and the policy makers they advise, and many clinicians as well, the concept of bundled payments has enormous intuitive appeal. Not surprisingly, then, bundled payments have become the latest nouvelle vague in this arena.

On the way from concept to implementation, however, bundled payments have to run, first, the gantlet of health care providers, not all of whom gain in the switch to bundled payments from F.F.S., and, second, the gantlet of political partisanship. (Because bundled payments are so enthusiastically endorsed now and yet face these serious obstacles, I shall return to them in the future.)

Capitation is the third base upon which payment to providers of care can be made. This concept is particularly suited to nonepisodic, chronic care.

Under capitation, an organization — for example, a large, multispecialty medical group or a staff-model health maintenance organization such as Kaiser Permanente in California — willing to coordinate all care an individual may need during an entire year against a prepaid flat capitation receives a payment that is adjusted for the expected, actuarial risk of the patient.

Subsequent to receipt of that payment, the paid organization is expected to assume financial risk for the care actually needed by the covered individual. In extraordinary circumstances that could not have been actuarially foreseen, there may have to be ex-post risk-adjustment payment.

Annual salaries for health personnel, including physicians, and predetermined budgets for institutions are the final base upon which payment can be made for health care.

Budgets for institutions, including nursing homes and hospitals, have been widely used around the world, but less so in the United States.

Health personnel other than physicians have traditionally been salaried everywhere. Hospital-based physicians are salaried in many countries and increasingly in the United States, where physicians have switched from self-employment to being employees of hospitals, academic health centers, clinics or large group practices.

Salaried physicians almost always receive their payments from an institution (e.g., hospitals or a clinic) that acts as an intermediary between insurance carriers and patients, on the one hand, and physicians on the other. These institutions may be paid by any of the other payment bases in the chart, and frequently by F.F.S.

When physicians are in the employ of hospitals, the hospitals have far more control of the costs they incur over the signature of physicians ordering hospital services than hospitals have under the traditional American system, in which self-employed physicians have affiliations with hospitals that they can view as rent-free workshops

In that system, the order entry of self-employed physicians attending their hospitalized patients causes the hospital to incur costs over which they have little or no control, while the physicians initiating these costs have typically not been held formally accountable for them. From a managerial perspective, it is an awkward arrangement (see “Hospital Economics 101”).

While F.F.S. payment is generally thought to result in overuse and misuse of health care services, bundled payments, capitation, budgets or physician salaries carry with them the risk that clinically desirable services are withheld from patients for financial reasons or simply because exertion is not rewarded.

Therefore, these methods must be accompanied by some means to protect patients from these untoward effects through constant monitoring of the care rendered.

During the 1990s, for example, California experimented widely with capitation — alas, with mixed results. As the California HealthCare Foundation has noted, capitation methods must be accompanied by constant monitoring of the care rendered, to protect patients from these untoward effects. Actually, the same is true for all payment methods, including F.F.S.

Indeed, anyone who thinks for a moment about the problem of paying the providers of health care will quickly come to the disheartening conclusion that there is no ideal method of injecting money into the health care system. Each approach has strengths and weaknesses that must be traded off against one another in settling on a payment option.

In my next post, I shall examine the alternative methods of determining the level of payment per unit of whatever base for payment is chosen. Here, too, the choice of method is not obvious. Each method has strengths and weaknesses.

DAVID LEONHARDT

Thoughts on the economic scene.

One of the striking aspects of Vice President Joseph R. Biden Jr.’s critical public comments this week to Xi Jinping, the likely next leader of China, was how they contrasted with the Obama administration’s typical approach to China.

As James Fallows, who knows a thing or two about China, wrote in his recent Atlantic cover article assessing President Obama’s first term, the administration has generally combined “a low-key demeanor” in public with clear, frequent messages in private about American priorities. Mr. Fallows concludes:

The strategy was Sun Tzu-like in its patient pursuit of an objective: re-establishing American hard and soft power while presenting a smiling “We welcome your rise!” face to the Chinese. “It was as decisive a diplomatic victory as anyone is likely to see,” Walter Russell Mead, of Bard College, often a critic of the administration, wrote.

So why would the administration now change tactics if the old one seemed to be working? Two possibilities seem most plausible.

One, it’s an election year. Jeffrey A. Bader of the Brookings Institution, who previously had the China dossier on Mr. Obama’s National Security Council, made this point to my colleague Mark Landler earlier this week. With Mr. Obama being attacked by Republicans for being too soft on China — and with many Americans blaming China for some of the economy’s problems — a low-key approach to China creates political problems.

Two, the administration may be worried that the earlier strategy is running its course. As I mentioned in an article this week on the economic relationship between the United States and China, the Obama administration has had some success in persuading Chinese leaders to raise the value of the renminbi, which has helped American exporters. Recently, however, the pace of renminbi appreciation has slowed:

Source: Federal Reserve, via Haver Analytics

This chart shows the change in the renminbi-dollar exchange rate over the previous 13 weeks, which is roughly three months. The pace of appreciation peaked in late 2010 — coincidentally or not, shortly after a September 2010 trip that Lawrence H. Summers and Thomas E. Donilon, top White House officials, took to Beijing, in part to lobby China on the exchange rate. The rate slowed in early 2011 and has slowed further in the last few months.

Is it possible that the White House feels the need to get a bit more outwardly aggressive with Beijing?

(A technical note: The chart here shows the exchange rate without taking the differing inflation rates in the two countries into account. Taking inflation into account — which produces the best measure — would show faster appreciation over the last year and a half but would still show the pace to have slowed recently.)

CATHERINE RAMPELL

Dollars to doughnuts.

As I mentioned in an earlier post, the pay gap between men and women persists even when you control for the type of job and various demographic factors like age and experience. But some of the “softer” aspects to work may partly explain the wage differential: perhaps women are making a trade-off between pay and other aspects of work that make them happy.

PayScale, a company that collects data on salaries, has broken down responses it has received from 30,000 workers who submitted salary and job evaluation data to its site over the last year. (Note: Workers opt into PayScale’s database, rather than being randomly selected. PayScale has said that it regularly compares its data to those from the Labor Department and other sources to make sure its numbers appear accurate and representative.)

When asked whether their jobs make the world a better place, women were much more likely to say “very much so” than were men:

Source: PayScale

Aside: Who exactly are those workers who say their jobs “may make the world a worse place”? I’ll have more on that in a later post.

Men also spend more time commuting to work, with a median commute that is 20 percent longer (24 minutes for men versus 20 minutes for women).

Women and men are about equally likely to express satisfaction with their work, although pay level more seems more likely to influence job satisfaction for men. The median woman who loves her jobs earns 29 percent more than the median woman who hates hers, whereas the median man who loves his job makes 47 percent over the median man who hates his:

Source: PayScale

On the other hand, on a few other subjective dimensions of their jobs, men still seem to be better off than women.

For example, 19.4 percent of women said their job is “extremely stressful,” compared to 14.9 for men.

I was also surprised to find that men report having more flexible schedules than women:

Source: PayScale

Since women are still more likely to be the primary caregivers in their families, I would have guessed that they would be more likely to gravitate toward jobs that offered very flexible hours. Women are more likely to work fewer hours to begin with, though, so maybe the length of the workweek matters when it comes to planning absences.

Other theories?