Consumer Sentiment, Junk Fees, Medical Debt, and the Future of Economic Policy with Neale Mahoney

Jon Hartley and Neale Mahoney (Stanford Economics Professor) discuss Neale’s career, Neale’s research on consumer sentiment, junk fees, and medical debt, as well as Neale’s time in the Biden Administration National Economic Council and the future of economic policy.

Recorded on January 8, 2025. 

ABOUT THE SPEAKERS:

Neale Mahoney is the Trione Director of Stanford Institute for Economic Policy Research (SIEPR), a Professor of Economics at Stanford University, the George P. Shultz Fellow at SIEPR, a Research Associate at the National Bureau of Economic Research, and an Affiliated Professor at J-PAL. In 2022-2023, he was a Special Policy Advisor for Economic Policy in the White House National Economic Council.

Mahoney is an applied micro-economist with an interest in healthcare and consumer financial markets. He is a member of the Consumer Financial Protection Bureau (CFPB) Academic Research Council. He received the ASHEcon Medal in 2021 (given to an economist age 40 or under who has made the most significant contributions to the field of health economics) and a Sloan Research Fellowship in 2016. 

Before joining Stanford, Mahoney was a professor of Economics and David G. Booth Faculty Fellow at the University of Chicago Booth School of Business. He was also a Robert Wood Johnson Fellow in health policy research at Harvard University and worked for the Obama Administration on healthcare reform. Mahoney received a PhD and MA in economics from Stanford University and an ScB in applied mathematics-economics from Brown University.

Follow Neale Mahoney on X: @nealemahoney

Jon Hartley is a policy fellow, the host of the Capitalism and Freedom in the 21st Century Podcast at the Hoover Institution and an economics PhD Candidate at Stanford University, where he specializes in finance, labor economics, and macroeconomics. He is also currently an Affiliated Scholar at the Mercatus Center, a Senior Fellow at the Foundation for Research on Equal Opportunity (FREOPP), and a Senior Fellow at the Macdonald-Laurier Institute. Jon is also a member of the Canadian Group of Economists, and serves as chair of the Economic Club of Miami.

Jon has previously worked at Goldman Sachs Asset Management as well as in various policy roles at the World Bank, IMF, Committee on Capital Markets Regulation, US Congress Joint Economic Committee, the Federal Reserve Bank of New York, the Federal Reserve Bank of Chicago, and the Bank of Canada. 

Jon has also been a regular economics contributor for National Review Online, Forbes, and The Huffington Post and has contributed to The Wall Street Journal, The New York Times, 
Today my guest is Neale Mahoney,
who's a professor of economicsat Stanford University and
the Director of the Stanford Institute forEconomic Policy Research, or CPR.
Neale is a highly distinguished, widelypublished applied microeconomist, and

(00:30):
recently served as Special Assistant tothe President for Economic Policy during
the Biden administration, working atthe White House National Economic Council.
Welcome, Neale.

>> Neale Mahoney (00:37):
Great to be on the podcast, Jon.

>> Jon Hartley (00:39):
Really wonderful to have you on here.
I want to start, Neale, andjust talk about your background and
where you grew up.
How did you first getinterested in economics?

>> Neale Mahoney (00:48):
Yeah, great question.
So I grew up in Amherst, Massachusetts,College Town in Western Mass.
Home of Amherst College,Hampshire College, and UMass Amherst.
My parents are both academics,my dad's a retired
professor of food science,with a PhD in biochemistry.

(01:11):
My mom actually defended her dissertation,
her PhD dissertation in nutritionwhen she was pregnant with me.
Took some time off to raise me andmy brother and
then went back to Amherst College to workin a microbiology lab on research and
advising students once Iwas in elementary school.

(01:32):
So grew up academic house andin a house where there was a lot
of exposure to an interestin economic policy.
So listening to the news,reading newspapers, arguing about things.
As we got older and I came to economicsout of an interest in policy.

(01:53):
I was thinking about the questions ofdomestic policy, international policy,
and found economics andeconomists to be illuminating and
credible in the frameworks they brought,which helped me think
about a complicated world in tractableways and in the evidence and

(02:14):
the analytical rigor they broughtto thinking about policy.
And that just hugely appealed to me andthat set me on the track
to being first taking AP Economics in highschool, then being an undergrad econ and
math major, andthen finally going to get my PhD.

>> Jon Hartley (02:36):
Great, and so you're a boss guest.
I think you must be a Boston Red Sox fan.
I guess, given the fieldsthat your parents studied,
did that influence you tostudy health economics,
which is sort of a big, I think,theme in your own research or?

>> Neale Mahoney (02:54):
Yeah, no, it's a good question, actually.
My interest in in healtheconomics grew out
of the classes that Iwas taking at Stanford.
I was taking second yearIndustrial Organization
on competition and regulation in markets.
And you know, I found the, the tools,the frameworks to be very powerful.

(03:21):
I found the topics of inquiry to beLess interesting than I would like.
And there was, this was 2006,there was, I think,
a growing debate about healthcare policy.
And so my primary advisor is,I guess you have an advisor for life,
John Levin, buthe's gone on to bigger and better things.

(03:45):
But he pulled me into a projecton health insurance markets and
it was a combination of beingable to use these IO tools with
an area that I think is important andinteresting and
really rich with economics, which,which got me into health economics,
which continues to be, you know,a, a large share of my portfolio.

(04:10):
But I have very broad interests.
So you know, I,I'm working in lots of areas.

>> Jon Hartley (04:16):
That's great. And IO being industrial organization for
those that aren't familiar.
And John Levin, I mean,he's now the President of Stanford.
It's amazing see how so
many economists in the presidentroles at various universities.
I wanna, first, I guess get into talkingabout some of your research you've done.
I think to start us off, you've done somereally great work on consumer sentiment.

(04:41):
I think macro and micro peoplewould find this really interesting.
I mean, yeah,
consumer sentiment is something that Ifeel like has been a big theme in the,
I guess behavioral macroeconomics, even inthe sort of policy world for a long time.
A lot of, I think Wall street tradersfollow the University of Michigan
consumer sentiment surveys havebeen running for many decades.

(05:02):
How much does consumer sentiment reallymatter for the macroeconomy in your mind?
And I mean, what do we know about it?
We know it's I think correlatedwith economic activity variables.
But I mean what do weknow is actually causal?
Does weak consumer sentimentcause negative economic activity?
Does negative economic activitycause negative consumer sentiment?
And what do we know aboutseminate measurement and

(05:24):
how much of it maybeis politically driven?
I know you've done a lot of work on this.

>> Neale Mahoney (05:28):
Yeah, so great questions.
I will try and get to them as I maybe I'lltell you a little bit of the story of sort
of how we got into this space and what wefound as a way of answering your question.
So together with another Stanford graduatestudent or Visma graduate student,
Ryan Cummings, we got interestedin consumer sentiment, or

(05:51):
I guess started doing work inconsumer sentiment in fall 2023.
When this really large gap emergedbetween consumer sentiment as
measured by University of Michigan andwhat you would predict if
you looked at the historical relationshipbetween consumer sentiment and

(06:12):
economic outcomes and you sort of rolledthat forward into that time period.
And so I think like many others,
we wanted to come up with explanations andwhenever you see a big gap.
I think there are multiplefactors at play.
I'm not going to argue that weunderstand everything that's going on,

(06:35):
but we wrote two pieces whichwe thought were illuminating and
got a good amount of traction.
One of them looked atpolitical polarization.
As you mentioned,responses to these surveys on
consumer sentiments based onfive questions have become,

(06:59):
I think, increasingly politicized.
So when a Democrat is in the White House,
people who affiliate with the DemocraticParty tend to be more optimistic.
When a Republican is in the White House,
people who affiliate withthe Republican Party?
One thing we pointed out, this sortof jumps off the page if you look at

(07:23):
the data carefully, is that thispolitical polarization is not symmetric.
We wrote the line that Republicanscheer louder and boo harder, but
their sort of deviation is about two and ahalf times as large as that of Democrats.
And we could speculate on reasons.
Maybe they're just betterfans to their team.

(07:46):
But that means that whenRepublicans are in office,
then because their positive sentimentis not canceled out by Democrats,
there's a little bit of a boost ora moderate boost, and vice versa.
So we found that if you adjust for this,
you can explain aboutone third of the gap.
So by no means all of it, but enough thatit was sort of interesting to write up.

(08:10):
And I think it wassomething that resonated.
The second piece we wrote, which I thinkalso resonated is this was in fall 2023.
And at that point inflation,the way economists measure it,
which is the change in prices overthe last year had come down to,

(08:31):
I don't remember the exact number,let's call it around 3%.
And so there was this puzzle.
While yes, consumers, we know sentimentis dragged down by inflation,
but now measured inflation ishistorically close to normal,
why is sentiment still depressed?

(08:54):
And we made the point which is consumer.
While economists measure inflation asthe price change over the last year,
consumers experience inflation as thechange in prices when they go to the store
relative to what they think is normal.
And if you're buying eggs, maybe that'srelative to the price last week or
last month.
But if you're going to buy a pair ofnew running shoes, you don't run as,

(09:18):
as much as you like to.
Like me,it's based on the price three years ago.
And so, if prices increased a lottwo years ago, three years ago, and
not as much this year, you will still getsticker shot when you go into the door.
So we did this analysis,we found that inflation has
a enduring effect andthat it has a half life of one year.

(09:42):
Which means a shock to inflation.
The impact in year one let's say it's10 percentage points, in year two
it's 5 percentage points, in year threeis 2 and a half percentage points.
And so it just takes a while for peopleto acclimate to the new price level.

>> Jon Hartley (10:02):
Interesting.
So this is more but I guess,I think very timely, I guess,
with all these elections where incumbentsare kind of being voted out of office.
That it's really price levels that matter,
rather than year overyear inflation rates.
Which, I guess, year over yearinflation rates is generally what
central bankers pay attention to andinternal policy makers pay attention to.

(10:22):
But at the end of the day.

>> Neale Mahoney (10:23):
It's just like one nuance, is it?
I don't think it's price levels, right?
A Coke costed a nickel forsomething like 100 years.
And even now we're not outragedwhen we go into the store and
bottle of Coke would cost 1.50.
But it takes a while for us to acclimate.
And so not as far as price levels, but

(10:45):
it's not just inflation over the lastyear that people are experiencing.
And so, you know,we had some estimates in the paper on,
based on historical patterns,how long it takes for
the impact of inflation to work its waythrough the system, two, three years.
But, you know,
I think that's the frame of mind thatI think the evidence suggests that one

(11:07):
should take when we're thinking about theimpact of inflation on consumer sentiment.

>> Jon Hartley (11:12):
Interesting.
Well, I do know that whenyou look at elections,
there are these shocksto consumer sentiment.
Where basically membersof the losing party,
their consumer sentiment basically
collapses after elections.

(11:34):
And this is a pretty, I think what Iwould say is like a pretty robust result,
I think, across countries.
What's interesting is I've seen some workby, I think Atif Mian and Amir Sufi,
and some others.
That they sort of look at electionsas kind of natural experiments and
look at these sort of potentiallyexogenous shocks to consumer sentiment.

(11:58):
And, andwhat they find is that there aren't really
big real effects in terms ofthe differential between,
say, the losing parties, consumerspending versus the winning parties.
And I think that kind of casts someshade on the idea that consumer
sentiment really matters a ton interms of economic activity and
that it's maybe a reverse causality thing,

(12:21):
that economic activity really causesshifts in consumer sentiment.
I'm curious what your thought ison the sort of causal questions.
Obviously, Wall Street traders are veryclosely following these consumer sentiment
prints when they come out fromthe University of Michigan and others.
But maybe it's more just a proxy forhow economic activity,

(12:42):
real variables, are affecting consumers.
And I'm curious what you think aboutthe whole causal question here.

>> Neale Mahoney (12:48):
So there's, I don't remember all the details.
There was a study,I think it came out of the St.
Louis Fed probably close to 20 years agowhich said that consumer sentiment is
a leading indicator of economicoutcomes at that time.
But as it's become more politicized,it becomes maybe a leading
indicator of political outcomes,but less so of economic outcomes.

(13:13):
And consistent with the evidencethat you just talked through,
one puzzle in the data has been that even,
even though consumer sentimenthas been historically low,
that consumer spendingbehavior has been very robust.
And so I think that points to also,you know,

(13:35):
I wouldn't say that consumersentiment is useless.
It's just it is teaching usa different set of things over time.
And, like, there's a lot of research tobe done to help us understand what it's
teaching us, perhaps better and where ithas less predictive power moving forward.

>> Jon Hartley (13:55):
Yeah, absolutely.
And, I mean, it being a lead indicatoris certainly useful in forecasting.
Which is largely somethinga lot of Wall Street and
sort of policy economists tend to do ortend to use.
So I know they find that data very useful.
I want to pivot a little bit tosome of your other research.
A lot of your other research isfocused on health care, you know,

(14:17):
industrial organization,consumer regulation, and
really want to start with talkingabout your work on junk fees.
So, I mean, could you explain tous what junk fees are exactly?
How pervasive are they in the economy and
what you think some ofthe right policy fixes are?

>> Neale Mahoney (14:36):
Yeah, so maybe for context for this.
When I was in the White House in 2022,2023,
and everything inthe White House is done in team.
But I was a core member ofthe group that was sort of
building out the White Housejunk fees agenda.

(14:57):
Co-authored a blog whichlaid out the principles for
the agenda, ran policy processes,
I was writing speech blocks andtweets for the president.
I think the agenda wasclearly good politics.

(15:17):
And what I was trying to do, andyour listeners can tell me if we were
successful, is also trying toground this in good economics.
So what do I think are the economicsof these policies?
Markets work, andI'm a firm believer in markets.
When people can compare the price andideally the quality of goods on offer and

(15:41):
move their business to firmsthat provide them a better deal,
that provides the incentives for firms.
That's sort of a bedrock principlebehind competitive markets.
I think the most egregious example of junkfees are when there are mandatory charges.
Which are not rolled intosort of the upfront fee.

(16:05):
So if you're buying a concert ticket and,you know,
now I think these issues havemaybe been made more salient, but
you're buying a concert ticket andyou don't realize that you're going
to be hit with $20, $30 servicecharges when you're checking out.
And there's, you know, really goodevidence from experiments showing that if

(16:30):
you knew, you might not buy the ticket or
you might buy a cheaper ticket becauseyou have a certain budget in mind.
And so that's,
there's no economic reason why peopleshouldn't know the price when they're.
Before they enter the credit cardinformation, before they select the seat,
before they make this both time commitmentand I think also mental commitment into,

(16:53):
I'm gonna be near the frontof my favorite concert.
So I think one thing that thisagenda is trying to do is
get markets to work by forcing thoseprices to be upfront and all in.
There's a recent finalized ruleby the FTC which does this for

(17:14):
lodging and for events.
Some states have gone further.
State of California.
And I think the idea is likewhen this happens, one,
it makes markets more competitivebecause it reduces search costs.
You don't have to click through sevenscreens to figure out the price.
Two, I don't think we want marketswhere nice guys finish last or

(17:37):
firms that try and do well by theircustomers end up getting worse business or
less business because they looklike they're more expensive.
So I think it helps well meaning firms.
And there's this literature onexploitative innovation where I don't
think we want industries which are in thebusiness of coming up with new tricks and

(18:00):
traps for consumers.
We want businesses tolower their costs and
increase the quality ofwhat they're offering.
And so when you take thesestrategies off the table,
I think you're actuallyempowering markets to write that.
And obviously some,
not every policy is going to beconstructed like I would construct it.

(18:21):
If, you know,I'm sitting in my office as an academic.
There are political considerations,there are industry pressure groups,
but that is the North Starthat we've tried to lay out.
And you know, I've been, you know,whenever possible explaining this to
folks, lifting up policies which Ithink move towards this North Star.

(18:43):
And I think when policies stray from it,I'm also going to be critical.
So that is what I'm tryingto do with this agenda.

>> Jon Hartley (18:51):
And it's fascinating.
And, and I mean, anytime I feel like Ibook a hotel and I see a hotel price.
You know, it ends up being the casethat there's just like an extra,
I don't know, 40,50 being added here and there.
And it's, it takes a lot oftime to figure out, like what.
It's not salient,what the actual price is.
And so I think it's a superinteresting question because.

(19:12):
And I think it's feeds into freemarket and economic institutions,
which I think are a leadingdriver of growth,
especially liberal economic institutions.
And when we talk about the law andcontracting,
which is very important,my limited understanding of contract loss,

(19:35):
is that there has to be thisconcept of mutual assent, right?
And so if people are voluntarilyentering a contract but
not knowing the actual price,I think that kind of mucks up
this sort of bedrock principles ofvoluntary exchange and free markets.

(19:57):
I mean, there's a reason whyat sort of a much worse level,
why we have legal protectionsagainst fraud, right?
People can't kind of lie during thesesorts of economic transactions involving
contracting.
I think this is very muchkind of related to that.
I guess that the challengeis these price deviations.
I mean, sometimes they're small, right?

(20:19):
I mean, it's extra $40.
You can't really sue someone forfraud, right?
But these are little frictionsthat I think can really,
at some degree,muck up voluntary transactions.
And I think that's maybe a free marketcase that you could kind of make for that.
I know you've also done a lotof work on medical debt as well.

(20:42):
I mean, just how big ofa public policy issue is it and
what do you think the bestpolicy fixes are there?
I do know that a lot of these hospitalshave lots of medical debt that's kind of
outstanding.
I know there's a lot of charity care, but
obviously there's a lot of peoplethat are being chased around.
You have to pay outstandingmedical bills and so forth.

(21:02):
Often that skews to lower incomes.
Explain to us some of your work on thatand what the big issues are there,
as you said.

>> Neale Mahoney (21:11):
Thanks for taking me up for this.
I think since I was in grad school,I've been interested in
the intersection of our healthcaresystem and financial distress.
And part of this is economics.
Part of this is my sense of fairness,that having a health shock,

(21:33):
I think is incredibly disorienting,scary, burdensome.
And this is my preference,I don't wanna be in a world
where we're compoundingthat with financial shocks.
The question is, how can we dothat with policy which generates
benefits andnot too many unintended consequences?

(21:58):
And so it is sort of delivering helpto people who are going through
difficult times.
And that's.
That is trial and error.
So, on medical debt,
maybe I can start by telling youabout briefly about two studies,
I think, one which is discouraging andone which is more encouraging and
points us in a directionwhere I think we should go.

(22:22):
And I think the policymakers I'vetalked to have been responsive in
some of the policies they put out.
So starting in maybe it was 2016,myself and
people who became my co-authors sawan episode of Last Week Tonight
with John Oliver where as a stunt andto attract attention to the issue,

(22:44):
he bought and forgave millionsof dollars in medical debt.
And you can buy this fromcollection companies.
Collection companies are expectingto collect pennies on the dollar
after the recovery costs andso it's cheap to do.
And so, you know, he did this stunt and,you know, we called.
So he worked with a, a nonprofit whichat the time was called Rip Medical Debt.

(23:09):
Now they're called Undue Medical Debt.
And we called them up and said,you guys should study what you're doing.
You know, this could bereally beneficial for people.
It could be the rare example ofsomething which has a low cost and
high benefit, because there's a bunchof anecdotal evidence that these folks
are really struggling in that medical debtcould help them get back on their feet.

(23:33):
And so they play ball with us,these wonderful people at the non-profit,
they agreed to randomize theirdebt forgiveness where possible.
They didn't have enough money,an athlete would want to buy and forgive.
Trae Young would wanna buy andforgive medical debt.

(23:54):
In Atlanta, they couldn't buy it allobviously, so they randomized it.
And so we got this data.
We also ran some of ourown experiments and
we basically studiedthe impact on every outcome.
We thought we could measure yourthings you can see on credit reports.

(24:14):
We would run surveys where we'dlook at mental health people going
back to the doctor.
Our results were largely, butnot entirely disappointing.
So we found for people who had theirdebts reported to the credit bureaus,
removing that debt,I think unsurprisingly,
boosted their credit scores, especiallyif they didn't have other derogatories.

(24:37):
If you have seven flags on yourcredit report and they remove one,
you're not going to look that much better.
But if you have an otherwise clean creditreport, it does make a real difference.
But we couldn't detect any impacts onmental health or on healthcare access,
despite this being a population wherethere's really poor mental health and

(24:58):
people are less likely to go to the doctorthan I think clinicians think they should.
So that was one result.
I'll tell you another result, and thenI'll tell you how we square the circle.
We also did a study withKaiser Permanente where some nonprofit
hospitals in the US are required bylaw to provide financial assistance

(25:20):
to people who have large medical bills andare unable to pay.
There's a lot of investigative journalismsuggesting the degree to which
they do this or the degree to whichthey make this easy is limited.
I think Kaiser Permanente probably doesa good job and the qualification for
their program is based upon what weeconomists call regression discontinuity.

(25:45):
So if your income is below a specificlevel and it's 350% of the federal poverty
line, which, like, I think regularhumans don't know what it is.
I don't even know what it is formy family.
If you just below, you qualify.
If you're just above, you don't.
So we get a whole bunch of people apply.
We see people who just qualify,just don't.
You can compare the people whoqualify to the people who don't.

(26:07):
The people who qualify forthis financial assistance,
they are more likely to take their meds.
So it's Kaiser Permanente.
So they're in this integrated system,we can see everything they do.
More likely to take their meds, they'remore likely to go back to the doctor.
They're more likely to gettested in treatment for
mental health, for early stage diabetes.

(26:28):
So it does seem like addressing thesefinancial constraints, which I think make
people scared of going back to the doctor,showing up at the doctor is like
a random number generator in terms of thebill you're going to get for many people.
And removing that fear factor,eliminating some of those costs so that

(26:48):
people can afford coinsurance deductiblegoing forward makes a real difference.
The medical debt relief we were studying,I previously told you that
was occurring often five plusyears after the hospitalization.
So once the debt hadbeen sent to collections,

(27:09):
once a primary debt collectorhad scrubbed it over,
I think at that point, other thanthe impacts on your credit report,
it's probably a little bit,it's too little, too late.
People have moved outside of the windowwhere they need follow up care for
their health condition.
They're probably used toscreening their phone calls,

(27:30):
ignoring letters from debt collectors.
And so I think what we'relearning from this research
is the burden of medical debt is real, but
addressing it sort of superdownstream where it's
cheap is limited cost but limited benefit.

(27:51):
Addressing it further upstream,some of those people are going to pay.
So it's higher cost, but it also, youknow, I think has demonstrated benefits.
And what we're trying to figure outnow in research, is there intermediate
policies which give us some benefit,aren't too expensive, right?

(28:13):
The folks who can and should pay are stillpaying, but the folks who are never going
to be able to pay are getting relief earlyenough so they get the care they need.
So that is the agenda.
And we've seen lots ofaction by cities and
states where I think they recognize thatthey're doing this downstream relief but

(28:34):
they're also trying to addressthings closer to the source.
So I'm cautiously optimistic that weare both going to figure out what is
good policy and we're going to movetowards doing it in this space.

>> Jon Hartley (28:47):
Yeah, very interesting too on the,
I guess the RCT sort of limitedresults are interesting that you know,
the credit scores change butnot too much else.
So I just wanna I guess pivota little bit and I think medical,
that's one, I think it's a huge issue anda lot of people come

(29:09):
out of these unexpected healthshocks in their lives and
they either sometimes havechallenges affording things and
the medical debt can follow peoplearound for quite some time.
Just pivoting to a moreof a macro level here,
you served in the Biden administrationon the National Economic Council,

(29:33):
which is the White House's EconomicPolicy Coordination Council.
You were particularly focusedon energy and junk fees and
a whole set of other issues.
What do you think the major lastingaccomplishments of the Biden
administration's economicpolicy agenda are.
I mean, we'll see how much the InflationReduction Act gets rolled back

(29:57):
in the Republican reconciliation tax bill.
I predict that much of it will be.
But I'm just curious, sort of evenbeyond the Biden administration,
what do you think the pathforward on economic policy is for
the Democratic Party followingKamala Harris's loss to Trump in 2024?
I mean, do the Dems go back to more of a,a Clintonite vision of sort of,

(30:23):
you know, free trade,somewhat more free market oriented, or
more down the road of Elizabeth Warrenwith certainly a much
more progressive approach that'sless friendly to markets?

>> Neale Mahoney (30:38):
Yeah, so let me start with the last question, and
this is something I'vespent time thinking about.
I think like many people who are incapital D Democratic policy circles,
in the wake of the election, my viewis that the Democratic Party can and
really needs to be a big tent andthat it's sort of a false dichotomy

(31:02):
between the more progressive policy andthe more centrist policy.
I think instead it's building out andmaking case for good policy.
And so let me tell you a littlebit about sort of how I try and
do that from where I sit as an economistand why I think it can be successful.

(31:29):
I think there are sort of some policieswhich are say, coded as progressive.
So some of the junk fees policies,I think are coded as progressive.
They came out of thosesort of think tanks.
They were championed by peoplefrom that wing of the party.
And this is not the case withevery progressive policy.
But I think these policies actually,

(31:52):
when designed correctly andwhen messaged correctly, I think.
I think have much broader appeal.
And that is what I've beentrying to do is using I think
a long standing literaturein behavioral economics and
in sort of study ofcompetition to show that.

(32:15):
These policies should appeal to people whobelieve in markets and want them to work.
And actually know that savingmarkets from some of their excesses
is actually going to help having a moremarket oriented economy moving forward.
They realize that this is sort ofimportant policy to be championed.

(32:39):
And so that's what I was trying to do,or one thing I was trying to do there is
build a bridge between the progressivewing and the centrist wing.
And I think we were reasonablysuccessful in doing that in reading
the types of journalists who thenwrote op EDS in support of the policy.
In terms of bipartisan support forsome of the bills that were

(33:03):
introduced in committee wherewe've seen this passed,
I think with broad bipartisansupport in states.
So that would be one example of takingsomething that's coded as progressive.
Using evidence to show that this isactually benefiting in a stories
should be supported by groups whichextend, I think across the right.

(33:28):
You see folks like Holly whoare supportive of some of these
sort of competition consumerprotection policies.
I'll give you another example whichworks in the other direction,
which is housing policy.
I think the yimby sort of removingconstraints on the supply of housing.

(33:50):
Those policies are sort oftraditionally coded as centrist,
center right, center left,sort of deregulatory.
But because of this huge body of evidence,
I think there's been now understandingamong the progressive left that.
Even though deregulationisn't the first thing that

(34:11):
those folks think about whenthey wake up in the morning,
that housing is a sort of kitchentable issue for every American.
And regulation is preventing us asa society from allowing people to live
where they want to live, allowingpeople to live where the jobs are.

(34:31):
And so we've taken a center,center right coded issue and
with evidence createda much broader coalition.
So that's just to return to your point.
I think Democratic party can andshould be a big tent and
evidence can build bridges betweenprogressives and centrists on good policy.

(34:54):
And that's, I think that'ssort of a key thing I try and
do is how can I make a case forgood policy and
build a broad coalition in support of it.

>> Jon Hartley (35:05):
It's fascinating and I think there definitely are some
realignments going on Ithink in both parties.
And I think you're rightthat there is this sort of,
I guess maybe even a neo Populist sortof bipartisan shift on things like for
example, pro family taxation.

(35:26):
And you see sort of pushes for
expanded get child tax creditsto some degree with maybe
some favoritism towards babybonus oriented policies.
You've also got, I guess somethoughts on paid family leave and

(35:47):
maybe some bipartisan consensusemerging on that too.
But it's interesting too,I guess on the land use regulation front,
you would think that in general maybetraditional Reaganite Republicans would be
in favor of housing deregulation.
And especially, it's deregulation thatkind of helps, helps the poor a lot.

(36:08):
It's interesting how I think that theDemocratic Party is much more embraced,
you know, the EMB movement.
And I think it makes sense at some levelbecause it is an issue that largely pits
incumbent homeowners againstnon incumbent homeowners.
And how you make the case toincumbent owner owners to somehow
take a hit to their own housingvalues I think is a hard sell.

(36:32):
Even though maybe in the long run there'sa case that, you know, they'll bring in
more economic productivity totheir locality in the long run.
But yeah it's an interesting question.
I do think a lot of those YIMBYfolks do like public housing too.
I think the YIMBY movement itself isnot purely sort of a free market one.

(36:52):
I think there's many phases of it.
I'm curious.
One thought on behavioral economics is youwork a little bit in the space and I know
there was this big advent of behavioraleconomics in really the 2000s and 2010s.
And I think this sort of peakedwith the Thaler Nobel and
you had the Kahneman Nobel, andthese people were very influential

(37:16):
I think certainly in the 2010s andlate 2000s.
Where do you thinkbehavioral economics is at?
It sort of offered that the wholeRCT revolution was part of this and
this idea that you could sort ofstudy these interventions that could
potentially be low cost, high benefit,have a big policy impact.

(37:36):
Obviously, economists have totallyshifted into doing this kind of
research on the empirical front.
But I feel like the more behavioraloriented type interventions that have,
I guess maybe been a bit more challengingin the public policy sort of arena where.
One like providing evidence that thesethings can scale is a big issue.

(37:58):
There's the replicationcrisis has been a huge issue.
Dan Ariely and a lot of other sort ofbehavioral economists have kind of been
ensnared in there.
But there's this explosionof behavioral ideas and
I think there's a lot of them thatdon't really work very well too.
That's kind of another problem.
What do you think behavioral economics is?
I mean, there's some peopleout there that said that
behavioral economics is sort of dying orhas died.

(38:21):
What behavioral economics is, I think,hugely not well defined as well,
like any rct, I guess, could bea behavioral economics kind of issue.
But I think RCTs related torandomizing tax rates, for example,
is I think, very different from maybe someof the more nudge oriented ones that,.

(38:42):
Thaler andSunstein wrote about in the late 2000s.
But I'm just curious what your take ison sort of the state of evidence based
research in particular as it relates tobehavioral economics and policymaking.

>> Neale Mahoney (38:57):
So I don't think of myself as a behavioral economist.
And I think one measure of successof behavioral economics is I
do papers that I think havestrong behavioral components.
And so I think the field to someextent has been very successful

(39:18):
because now there's all these peoplewho think about, quote unquote.
Behavioral factors in consumerdecision making settings,
even in, in firm settings, which wouldn't.
And they don't think of themselvesas doing behavioral economics.
They think about themselves as studyingretail, of studying competition,

(39:41):
of studying the airline industry.
So that actually strikes meas a true marker of success,
that it is now just an acceptedpart of our toolkit,
like any field where people are beingentrepreneurial, something.
Things are going to work andsome things are not going to pan out,

(40:05):
you know, at scale and that's fine.
So I don't, I see that as a sign ofa sort of a healthy field, you know,
where people are being entrepreneurial andtrying things and trying to scale things.
So I don't.
Yeah, I'm not deep enough to have sortof more sophisticated views than that.

(40:27):
But, but it does strike me that,just like I'm not,
I'm not a research design person,I'm not a sort of causal inference person.
But all of my papers, I think hadabout causal inference in them.
It's just an accepted thingthat we do as economists.

>> Jon Hartley (40:47):
It's fascinating, yeah,
it's one of those thingswhere you're like in 2010s.
We had this massive rise.
All these governments wereadopting these nudge units.
And it was kinda presented along with,I think the book,
Nudge, if you read it,by Cass Sunstein and

(41:08):
Richard Thaler as this sort ofthird way type policy approach.
And so, well, I think it's sortof a great idea in its day.
I just feel like that the big issues thatare really sort of come home to roost
are taxes, trade is obviously back inthe forefront, and has been since 2016.

(41:32):
Both parties have prettysignificantly shifted on trade.
So I feel like a lot of the,which are really the more sort
of classic issues have sortof kind of eclipsed that old
kind of that maybe third waynudge sort of policy agenda or
evidence-based policyagenda to some degree.

(41:55):
I mean there's lots of RCT that shed lotsof light on things, on many areas of
public economics and, and definitelydon't want to discount any of that.
Research I think is super useful andsuper helpful.
But yeah, it's, it's interesting just how,how like I feel like a lot of
that evidence based policy work, like,you know, your junk fees work is a great

(42:16):
example of something that's had successin terms of, you know, going from
research to actually being implementedin actual the public policy space.
But you know, you just wonder like,
are there enough of these sorts of thingsthat you can really scale to create like
a policy agenda that's a sustainingsort of political one.

(42:37):
And it's hard I think to even sellthe masses on what even RCTs are.
I mean, certainly, people withacademic backgrounds understand that,
but I think it can sometimes be a bitharder in growing a larger coalition.
I wanna just spend a little bitof time talking about you and
your new role at SIEPR.

(42:58):
For the audience members who are lessfamiliar with what SIEPR does,
can you explain a little bit more aboutwhat it's doing and what your vision for
it is as you step intothe role as director?

>> Neale Mahoney (43:08):
Totally, so SIEPR, or Stanford Institute for
Economic Policy Research isan institute at Stanford,
and we try to do three things.
So one is attract, train,and launch careers of
young folks in economic research andin economic policy.

(43:34):
So we host the Stanford pre-docprogram which has 30 plus people.
We have visiting postdocs,we run programs for undergrads.
Something that I would like to do moreof over time is bringing people and
launch them into government jobs.

(43:56):
I think having ambitious, well trained
folks in government economic background,
I think in the long runis just hugely important.
So, so we'll be doing, doing more there.
So that's,that's bucket one of what we do,

(44:22):
Bucket two is that we, we host events.
So we have an annual economicsummit which has had many
high profile speakers over the years.
This year we have Jamie Dimon,Austan Goolsbee,
Ruth Porat, other sort of household names.

(44:46):
But then we also do almoston a monthly basis,
events where we bring in leading sortof economic thinkers in business,
in research and in policy, you know,to interact with our community.
And so I think that's, you know,a great resource for, for

(45:07):
students, for faculty, for,you know, folks who live nearby or
who just want to watchsomething on YouTube.
The third thing we do is wetry to do work which bridges
between economic research andeconomic policy.
And so there it's everythingfrom how can we support the type

(45:32):
of research which is goingto provide nonpartisan,
rigorous answers topressing policy questions,
to how can we do the translational work or
build models based uponeconomic research that will

(45:52):
help inform policymakerson a quick term basis,
let's say around housing policy or
some other issue thatthey're thinking about.
And we're trying to increaseconnective tissue with policymakers, so
that when they're thinkingthrough an economic issue,

(46:15):
they can pick up the phone and call us,and we can direct them to an expert and
help them think about the consequences andunintended consequences
of what they're thinking about,or give them a menu of options.
So, so I think, you know,super exciting job for me.
I have a great staff.
Stanford faculty and students are amazing.

(46:38):
No, there'll be a learning curve butwe're setting our height or
our ambitions high andhopefully getting close to them.

>> Jon Hartley (46:49):
Well, that's terrific.
I spent a lot of time at SIEPR events,and they're great.
And SIEPR,there's a lot of great programming, and
hosts a lot of great academics,and does a lot of great work.
A real honor to have you on, Neale,and to hear about your career, and
ideas, and as you're steppinginto a SIEPR director role,

(47:11):
what SIEPR's planning for the future.
Thank you so much for joining us.

>> Neale Mahoney (47:16):
Thank you for having me, Jon.

>> Jon Hartley (47:17):
This is the Capitalism and Freedom the 21st Century podcast,
an official podcast ofthe Hoover Economic Policy Working Group,
where we talk about economics,markets and policy.
I'm Jon Hartley, your host.
Thanks so much for joining.