Seth Richards-Shubik, an economist and visiting research scholar at the Center for Health and Wellbeing (CHW), has a longstanding interest in public health. His views, however, are not entirely rooted in academia. Prior to his current career, the Lehigh University professor tried his hand at politics. In fact, one might consider his work as a legislative staffer, and later a campaign manager, the foundational training ground for his concentration in health economics. Those crystalizing experiences offered valued insight into the challenges and opportunities related to health care, health inequities, and health policy.

In this Spotlight, Professor Richards-Shubik reflects upon his background and scholarly achievements while sharing plans for advancing his research at Princeton.

Q. I was surprised to learn that your undergraduate degree, earned at Harvard University, was a Bachelor of Arts in History and Science. Why did you choose this interdisciplinary focus, and how did it lead you toward economics?

A. It really was a fantastic major, and it was great for me. I went into it because I had a strong inclination toward a classical liberal arts kind of education, where you get some real training in both humanities and science. I was not being particularly strategic or thoughtful about the career implications; the choice was driven by intellectual interest.

Within that major, I initially concentrated on industrialization for the historical component and pure math for the science, given my passion for math. My interest in economics coalesced about half way through college. If you think about it, economics is the social science that brings math to the study of human social behavior. And history is the study of human behavior over time. So the groundwork was already there for me to have an interest in economic analysis of human society.

Q. What did you do immediately following graduation?

A. Before I was an academic, I had a career in politics. When I graduated from college, I did believe and still do believe in the power of government and collective action to make lives better. I wanted to go to Washington and work in government in some capacity, so I applied for tons of jobs and was hired by the late Martin Olav Sabo, U.S. Representative for Minnesota’s fifth district. Representative Sabo’s interests in income inequality and social-oriented policies, including health policy, resonated with me. I eventually concluded, however, that the only way to really advance policy was to win elections and decided to work on political campaigns for the next few years.

Q. Why did you leave politics?

A. After working in politics for a while, I recognized that my core skill set was not a perfect fit. So I went back to my college’s Career Services and took the Myers-Briggs test. My personality type matched me with a list of jobs ending in “ist,” – geologist, sociologist, probably economist – all of these academic, research-oriented careers. The assessment revealed that I, like many people in academia, am most energized by sitting and thinking about stuff, which pointed me back to some type of advanced graduate training. A Master in Public Administration was a sensible first step to see if I wanted to pursue a leadership role in government.

Q. After receiving your MPA from Syracuse, you earned your Ph.D. in Economics at University of Pennsylvania. What pulled you toward higher education?

A.  At Syracuse, I had the good fortune of working as a research assistant for one of my professors, Tim Smeeding. At the time, he was the director of The Luxembourg Income Study, an international consortium that looks at socio-economic outcomes for different countries around the world. In support of that project, I surveyed literature on the relationship between income inequality and health inequality. Tim then connected me to David Cutler, a health economist at Harvard, for whom I worked remotely during the second half of that year. Through those opportunities, and exposure to a few Ph.D. courses in the university’s economics program, I realized that it would be joyful and engaging for me to continue on with a Ph.D. and a career in academia.

Q. A sizable portion of your research has focused on health economics. Certainly, your background contributed to this interest, but can you elaborate on why you chose this area of specialization?

A. Health care is both extremely important from a policy perspective and fascinating from an economic perspective. About one-fifth of our GDP [in the U.S.] goes toward health care, representing a huge portion of the economy and of lived experience in this country and in most countries. That explains the importance of health care policy.

The economic side is what started to light me up as I was working toward my Ph.D. Health care services are complicated, and the way we acquire them is convoluted. In the framework of economic terminology, there are tremendous informational frictions around health care services, so there’s a lot to think about. 

Q. Your early research studies health disparities, an issue that is very much in the spotlight right now as the pandemic exacerbates the divides. What drew you there, and what kind of issues did you explore?

A. How long your life progresses or ends is perhaps the most important dimension of existence. Differences in health, and in particular mortality, are a compelling marker of people’s wellbeing.

My first publication in this area, co-authored by David Cutler and Ellen Meara, documented the effects of education on life expectancy – and helped tell this story very clearly. Basically, we looked at the life expectancy of people with a high school degree or less and the life expectancy of people with a higher degree. We did two separate analyses, each over a ten period. In both cases, we found that life expectancy remained flat for people in the bottom half of this educational distribution while life expectancy increased for people in the top half. All of the gains over that period went to one half of the population. That is really stark and lines up with what you see in the evolution of economic resources as well. Broadly, economic resources are accruing more to people who already have high resources.

Q. Your most recent work investigates the behavior of medical providers, with a focus on financial incentives. What piqued your interest on this front?

A. Economics has a lot to say about financial incentives, offering sophisticated tools for thinking about how to improve them and how they can influence behavior. When it comes to health care and health care systems, we historically think about paying providers based on what things cost; it’s a natural way to think about things. But as an economist, you should be thinking in terms of what you want to induce – the outcomes you want to achieve for your payment. It is fascinating to explore the impact of informational frictions on treatment decisions and health.

Q.  How has network modeling contributed to your research?

A.  My work on networks, in the context of health care, is primarily related to referrals among physicians. For example, when you need heart surgery you don’t look for a heart surgeon in the yellow pages. You probably talk to your primary care physician or cardiologist. This referral process is particularly important for specialty care, but it’s not well understood.

In terms of informational frictions, patients and their doctors don’t always have a lot of information about the specialists available to them. So the doctor may refer to the specialist he or she is most familiar with rather than the specialist who is the best match for a particular patient. Network modeling can be a useful tool for analyzing these dynamics, optimizing outcomes and quality overall.

Q. What influenced your decision to continue your research at Princeton’s Center for Health and Wellbeing?

A. I am fortunate to have had past interactions with [CHW co-directors] Janet Currie and Kate Ho, both of whom made me aware of the position and encouraged me to apply. The Center for Health and Wellbeing and the university, more broadly, are top of the world for this kind of research.  

While I’m here, I am also teaching a Ph.D. course on industrial organization and public policy, ECO 543, which I’m very excited about.

Q. Your work at Princeton will expand upon prior studies, with the first project addressing provider payment systems. Can you share an overview of your initial research in this area?

A. My prior work on provider payment systems has a specific application – an expensive medication used in dialysis care. It is a biologic that increases the production of red blood cells, which is important for patients with kidney failure but also comes with severe health risks. This treatment had powerful financial incentives behind it in the 1990s and early 2000s, when dialysis centers were reimbursed a flat rate by Medicare. Many centers were able to negotiate purchase prices below that rate and made a positive margin on the doses they administered. About $2 billion dollars was spent by Medicare per year on this drug alone – out of $30 billion total spent on dialysis care. This is a clear case of financial incentives leading, quite possibly, to excessively high expenditures and greater patient risk.

My paper draws on sophisticated theoretical tools to formulate an optimal payment schedule.  Recognizing that different providers have different costs and degrees of altruism, we consider the extent to which providers pay attention to patient outcomes versus their own bottom line. Rich Medicare data allowed us to develop a model based on this heterogeneity, resulting in a non-linear contract that reimburses less per unit as centers buy more. Essentially, the contract blunts the incentive to provide excessive amounts of the medication and induces the best treatments possible.

Q. How are you building upon this research?

A. I’m thinking more about payment system reform and health care. There are at least two prevalent payment systems: one that incorporates outcome measures, known as pay-for-performance, and one based on benchmarking, in which providers are penalized when outcomes fall below the industry average. The broad idea for my next project is to look at the theoretical literature and well-developed tools, once again, for analyzing these systems within the context of another salient application, such as Medicare’s Hospital Readmissions Reduction Program. I would like to compare the payment systems we are using now to what we could do optimally, developing a model for this particular application. I have several thoughts about the application but look forward to discussing possibilities with the interdisciplinary CHW community, where researchers have deep knowledge of health institutions and payment programs.

Q. The other project you’ll be working on expands your research on socioeconomic differences in mortality. Can you provide some context for this study and what you plan to explore?

A. My prior paper looked at the relationship between life expectancy and education over time, considering that the distribution of educational attainment has been shifting drastically in this country and others. We applied a methodological approach to account for the change, studying U.S. data between 1984 and 2006, and found clear evidence that this measure of health disparity increased for women but not for men. Our hypothesis is that tremendous progress in addressing cardiovascular disease helped men more than women in the late 20^th century.

What I’d like to do next is apply this framework to other countries, where there are similar concerns about rising health disparities, and perhaps do an update in the United States. With all of the work coming out of Princeton on deaths of despair, there is a lot of interest in what’s been happening since 2000. The focus will somewhat depend on where data is readily available.

I plan to collaborate with researchers at CHW, the Departments of Economics and Sociology, the Office of Population Research and other areas to exchange ideas and advance this research.

Q. Earlier, you emphasized your desire to make an impact on society. What is your hope regarding the contributions of your research and how it can make a difference in global health?

A. My agenda is focused on looking at ways to help providers and patients jointly arrive at the most efficient treatment course – both in terms of cost and outcomes. Looking narrowly at my work on payments, I hope it opens the door to conversations with Medicare and other payers about payment system reform. If payers adopted a system where they change the rate based on how much treatment is provided, rather than paying a fixed rate, it could have a tremendous impact. That’s certainly something I’ve thought about as this project has developed… and comes back to your question about what got me into financial incentives. If I can help to drive changes in policy, there is the potential to save millions or even billions of dollars – and to put that money toward purposes that can better improve health or improve lives in other ways.