Gun Control And Mass Shootings: Would Lives Be Saved?

An analysis of every US mass shooting over the past 30 years shows that two small policy changes, restricting high-capacity magazines and introducing stringent background checks, might have saved over 500 injuries and deaths, reducing total casualties in mass shootings by 50%.

Various proposals have been set forth since 2012’s numerous mass shootings, ranging from much stricter gun regulations to arming more individuals in public spaces. Starting from Mother Jones’ list of US mass shootings over the past 30 years, I analyzed the potential impact of two proposals in particular: would a ban on high-capacity gun magazines have reduced casualties, and would stringent background checks of gun purchasers have reduced the number of shootings? I researched the incidents surrounding each shooting to determine whether each proposal would have had any impact. The data are summarized in the table below, with the full research spreadsheet available here.

Shooting Deaths Injuries Lives Saved Injuries Prevented Weapon Legally Acquired? Notes
Totals: 459 481 250 324 Legal in 58 of 63 cases 54% of deaths and 67% of injuries might have been prevented with the policies analyzed.
Newtown, CT Sandy Hook Elementary 27 2 17 0 Yes – legal weapons in same household The shooter’s rampage was stopped by a quick police response. If the shooter had to reload 3 times as often, he would hit many less victims, as he fired on each victim multiple times.
Minneapolis, MN Sign Company 6 2 1 0 Yes The shooter reloaded at least once during the shooting, and initially struggled with victims.
Oak Creek, WI Sikh Temple 6 4 3 2 Yes In a public setting with many adults, it’s possible shooter would have been stopped while attempting to reload, or would have retreated outside more quickly if he had less capacity.
Aurora, CO Theater 12 59 12 59 Yes A lucky form of weapon capacity control prevented a larger disaster, as the shooter’s weapon jammed and he was only able to fire roughly 1/3 of the 100 round magazine. A properly integrated background check system might have stopped the incident entirely.
Seattle, WA Cafe 5 1 0 0 Yes It’s not clear that the gunman ever needed to reload, and though he had a history of mental health problems, he was never treated and never convicted of a felony.
Oakland, CA – Oikos University 7 3 7 3 Yes HCM limit would have no impact here, but the shooter was expelled from school for behavioral issues, which might have been caught if this data were submitted to a comprehensive background check system.
Atlanta, GA – Health Spa 4 0 4 0 Yes HCM limit and background check would have no impact here
Seal Beach, CA – Salon 8 1 3 0 Yes The shooter reloaded during the shooting per police reports, so lowering weapon capacity would likely have lowered casualties.
Carson City, NV – IHOP 4 7 2 3 Yes The shooter fired over 30 rounds per eyewitness accounts – lower capacity would have constrained him.
Tucson, AZ – Giffords shooting 6 13 4 9 Yes Shooter was tackled and stopped while he tried to reload – direct evidence that lower capacity would have decreased the toll.
Manchester, CT – Beer Company 8 2 4 1 Yes Shooter used two weapons and fired multiple rounds at many victims – had he been limited, he would have run out of ammunition earlier
Lakewood, WA – police officer shooting 4 0 0 0 No Capacity limits might not have helped, as the shooter fired on four victims seated at one table, and hit all of them with his initial salvo.
Ford Hood, TX – army base 13 29 9 19 Yes Shooter reloaded many times, and 30 round magazines enabled him to fire roughly 170 rounds before being shot himself by military police. Multiple soldiers attempted to charge the shooter – if he had only a 10 round magazine, it’s entirely possible that he would have been tackled and stopped upon initial reload.
Binghamton, NY – civic association 13 4 9 3 Yes Shooter fired 99 rounds in total – this would likelybeen reduced if his weapon capacity were 1/3 as large
Carthage, NC – nursing home 8 3 0 0 Yes Since shooter used multiple weapons and never reloaded, it’s unlikely capacity limits would have mattered.
Henderson, KY – Atlantis Plastics 5 1 0 0 Yes Shooter did not use a high capacity weapon
Dekalb, IL – Northern Illinois University 5 17 5 17 Yes This incident’s casualty count is quite low because the shooter first fired with a very low capacity weapon, his 6-round shotgun – enabling many students to escape the classroom. Shooter also had a long, documented mental health history.
Kirkwood, MO – City Council 6 1 0 0 Yes Shooter used low-capacity revolver initially, and took a higher capacity weapon from a victim (police officer).
Omaha, NE – Westroads Mall 8 4 5 3 No Shooter appears to have emptied one magazine and then taken his own life.
Crandon, WI – sheriff’s rampage 6 1 0 0 Yes Shooter used a service weapon, so proposed rules/limitations would have had no effect.
Blacksburg, VA – Va. Tech 32 23 32 23 Yes Shooter reloaded many times, and used multiple weapons. Mental health check would have prevented weapons acquisition.
Salt Lake City, UT – Trolley Square 5 4 5 4 Yes Shooter did not use high capacity weapons
Nickel Mines, PA – Amish School 5 5 2 2 Yes Once shooter started firing, sheriffs approached – he killed himself as they arrived, and likely would not have had a chance to reload.
Seattle, WA – Capitol Hill 6 2 6 2 Yes Shooter had a weapons-related felony charge, which was reduced to a misdemeanor.
Goleta, CA – postal shooting 6 0 6 0 Yes Shooter had a previous history of mental illness
Red Lake, MN – high school 9 5 3 2 Yes Shooter possessed a gun in his bedroom despite being treated with Prozac. Since he was an adolescent, and his parents/guardians chose to give him a gun, background checks would be ineffective. Shooter shot his grandfather who was a police officer, and took his weapons.
Brookfield, WIChurch group 7 4 2 1 Yes Shooter suffered depression, but had no mental health or criminal records.
Columbus, OH – concert 4 7 0 0 Yes No HCM used, and no medical or criminal record. Nearby police stormed the concert and shot suspect
Meridian, MS – Lockheed Martin 8 7 4 3 Yes Shooter used military-style weapon with high-capacity
Melrose Park, IL – Navistar 4 4 4 4 Yes Shooter used military-style weapon with high-capacity, and was also a convicted felon
Wakefield, MA 7 0 5 0 Yes Shooter used high-capacity weapon and also had a history of mental illness, but with the mental illness far in his past and no criminal record, even stringent checks might not have denied him weapons. Shooter stopped firing at an arbitrary point and sat calmly til arrested. If he had lower capacity weapons, stopping to reload multiple times might have caused him to sit and wait for arrest earlier.
Tampa, FL – hotel 5 3 5 3 Yes Shooter was arrested for assault only a few months earlier, and bought weapon at a gun dealer
Honululu, HI – Xerox 7 0 3 0 Yes Shooter acquired a large number of weapons long before mental issues began.
Fort Worth, TX – Wedgwood Baptist Church 7 7 2 2 Yes Shooter committed suicide after emptying three magazines – but he had six more loaded. Has the magazines been 1/3 smaller, that would have lowered the toll proportionally.
Atlanta, GA – Day trading 9 13 0 0 Yes The shootings happened in multiple separate incidents, making it less likely that HCM limits would have had an impact. Barton was suspected but never charged in earlier murders, so background checks would have had no impact.
Littleton, CO – Columbine High 13 21 6 10 No Shooters used a high capacity Tec-9 and standard capacity 9mm, so avg capacity is used here. Details of the shooting indicate that in many cases shooters fired at the same victim multiple times – if limited in capacity, this would have reduced their ability to fire on additional victims.
Springfield, OR – Thurston High 2 24 1 19 Yes Shooter was tackled and stopped when he first tried to reload – a clear indication that lower capacity would have further limited casualties.
Jonesboro, AR – Westside Middle School 5 10 2 3 Yes Shooters ran away after firing 30 rounds – lower capacity might have reduced total rounds fired.
Newington, CT – Lottery worker 4 0 0 0 Yes Shooter chose specific victims and fired relatively few rounds, so capacity limits make no difference here.
Orange, CA – Caltrans 4 2 3 1 Yes Shooter entered shootout with police shortly after initial incident, lower capacity might have shortened his attack
Aiken, SC – RE Phelon Co 4 3 0 0 No Standard capacity weapon (illegally acquired) used
Fort Lauderdale, FL – city employee 5 1 0 0 Yes Standard capacity weapon used
Corpus Christi, TX – Walter Rossler Co 5 0 0 0 Yes Standard capacity weapon used
Fairchild AFB, WA – hospital 5 22 5 22 Yes Shooter possessed only one 75 round drum magazine – so he would never have to reload. Military police arrived quickly and killed perpetrator.
Aurora, CO – Chuck E Cheese 5 0 0 0 No Shooter fired less than 10 times, executing each victim, usually with a single shot
Garden City, NY – LIRR 6 19 2 6 Yes Shooter emptied two 15 round magazines and was tackled while reloading with a third magazine. Total rounds fired would have been decreased by 1/3 were magazine capacity limits in place.
Fayetteville, NC – Luigi’s Restaurant 4 6 2 3 Yes Shooter used a high capacity rifle, shooting was stopped by nearby police
San Francisco, CA – 101 California St office building 8 6 4 3 Yes Shooter used a 32 round Tec-9 in the shooting, and fired hundreds of rounds
Watkins Glen, NY – office 4 0 0 0 Yes Shooter killed four intentional targets with relatively few shots, and then waited for police to arrive – perhaps less than 10 shots total fired.
Olivehurst, CA – Lindhurst High School 4 10 0 0 Yes Shooter used two weapons and fired relatively few shots, so high capacity weapon limits would have no effect here. Shooter also had no prior criminal or mental history.
Royal Oak, MI – postal 4 6 4 6 Yes Shooter had his concealed weapons permit revoked on concern of mental illness. Shooter also used high-capacity magazines with his rifle and fired scores of rounds according to police.
Iowa City, IA – Univ of Iowa 5 1 0 0 Yes Did not use a high-capacity weapon, and did not display sufficient signs of mental illness prior to shooting to warrant attention
Killeen, TX – Luby’s Cafeteria 20 24 8 10 Yes Used high capacity pistols and reloaded multiple times – capacity limits would have enabled more victims to escape, as many escaped by exiting the restaurant.
Jacksonville, FL – GMAC plant 9 4 9 4 Yes Shooter had a history of violence and convictions, and yet legally purchased multiple weapons. Used a high capacity weapon in shooting
Louisville, KY – Standard Gravure Co 8 12 8 12 Yes Shooter used high capacity weapon, emptying its magazine and committing suicide with his second weapon. Shooter also had a lengthy psychiatric history including hospitalization
Stockton, CA – schoolyard 5 29 5 29 Yes Shooter had a lengthy arrest history and had served time in jail as an accomplice to armed robbery, and yet was allowed to buy weapons.
Sunnyvale, CA – ESL Co shooting 7 4 7 4 Yes Shooter was able to purchase guns while under a court restraining order
Palm Bay, FL – shopping center 6 14 6 14 Yes Shooter used a high capacity .223 caliber rifle, and killed two police officers during the shooting – one of them as the officer was trying to reload. Perhaps if the shooter’s capacity were lower, the officer might have himself fared better. Gunman also had prior assault conviction.
Edmond, OK – USPS 14 6 0 0 Yes Shooter was in National Guard and would have had access to weapons. Though he was referred to as “Crazy Pat”, he had no history of crime or treated mental illness
San Ysidro, CA – McDonalds 21 19 14 13 Yes Shooter used a high capacity weapon, Uzi, pinning down a quick-responding officer with 30 rounds of fire before re-entering restaurant
Dallas, TX – nightclub 6 1 0 0 Yes Shooter used an unknown handgun, emptying it into crowd and then rushing out – unclear that capacity limit would have any impact here.
Miami, FL – welding shop 8 3 8 3 Yes Shooter did not use a high capacity weapon, but purchased his weapons one day after failing a psychiatric exam ordered by his employer, the school district, and after incidents in which he appeared to be a threat to students
Birchwood, WI – hunting altercation 6 2 3 1 Yes Shooter fired 20 rounds at other hunters – if he had a lower capacity, it’s likely that another hunter would have been able to respond with fire

The analysis above attempts to answer the question – what would have happened in these incidents had the proposed laws been in place? Of 459 deaths and 481 injuries in 63 shootings, I estimate that 250 deaths and 324 injuries (54% of deaths and 67% of injuries) might have been prevented with the analyzed proposals. Each proposal, its method of action, and the analysis approach is described further below.

High-Capacity Magazine Ban:

Definition: Sales of high-capacity magazines to and between private citizens would be completely banned, and imports of high-capacity magazines for private use would be banned as well. While many magazines would exist in private hands, a magazine buyback could then be used effectively, as magazines are relatively inexpensive.

Method of Action:

  1. In some instances, the shooter was disarmed by potential victims while trying to reload – smaller magazine size clearly would have limited total impact in these shootings.
  2. In some instances, potential victims fled during breaks in the shooting enabled by reloading – if a shooter has to reload 2 or 3 times as often, this effect is multiplied.
  3. In some instances, law enforcement arrived relatively quickly, and most damage in the shooting was done via the initial magazine – a smaller magazine would have limited impact in the shooting in these instances.
  4. In a few instances, victims attempted to rush the shooter immediately. If a shooter could only fire 10 shots instead of 20-50, it’s possible that he might be tackled quickly rather than be able to continue shooting.
  5. In most instances, the shooter committed suicide after doing a certain amount of shooting, but always before exhausting ammunition. Since each reloading represents a break in the act, some shooters would commit suicide after having fired fewer total rounds if they were capacity constrained.
  6. In a few instances, the shooter appeared to choose a specific weapon because of its high capacity. If high capacity magazines were not available, would the shooter still go forward with the attack?
  7. In 18 of 63 shootings, shooters fired relatively few rounds, chose a small number of specific victims, or used standard capacity weapons. In these instances the high-capacity magazine ban has no impact. 29% of actual mass shootings fell into this category.

Analysis Method: If the shooting fell into the last category above, then zero impact is noted in the analysis. Otherwise, the casualty count is reduced by the ratio of the shooter’s magazine size to standard magazine size – if the shooter used a 30 round magazine, then the casualty count is estimated at 2/3ds lower (rounded up) with a standard capacity magazine. This approach will tend to underestimate the effect of a ban in instances like 1,4, and 6 above, while providing an accurate estimate or an overestimate in instances like 2, 3, and 5 above. In aggregate, I think this approach is unbiased.

Stringent Background Checks:

Definition: Create a mandatory national database of all felons, mentally ill, and others posing threats (anti-terror lists, those who have made threats against schools or other institutions). Mandate that all firearms transactions for new and used weapons, in public and private transactions, be checked against this database, with instant results. This stands in contrast to the current background check system, which is done on paper and via telephone call, not electronically.

Method of Action:

  1. Out of 63 mass shootings over the past 30 years, only 5 have involved illegally purchased weapons. Some of the shooters had a history of mental illness or a criminal record – preventing a sale of firearms to these individuals would reduce the frequency of shootings.
  2. Many of the shooters with a history of mental illness had no criminal record – it’s unlikely that they would know how to obtain an illegal firearm.
  3. Some of the shooters purchased weapons in the days after making threats against a school or other institution – in these cases, a properly implemented stringent background check system would have prevented the weapon sales.

Analysis Method: Shootings were identified in which a shooter had a documented history of mental illness, a criminal record, or had made threats against an institution prior to buying a weapon. In these cases (17 instances total) it’s assumed that the casualty count is reduced to 0, as the shooter would have been unable to obtain a weapon. In reality a certain number of shooters would then try to acquire weapons illegally, and some might succeed. But a certain number of mentally-ill or former felons might never try to obtain a weapon if they knew they had no easy or legal means to do so, providing an offset.

Analysis of Assault Weapons Ban and Armed Civilian Presence

Two other proposals have been mentioned in the last several months – a ban on assault weapons and the placement of more armed guards or civilians in public places. On the question of assault weapons, the data from mass shootings shows that shooters preferred a range of semi-automatic weapons with high-capacity magazines. Weapon capacity makes a difference, but the type of weapon (handgun vs rifle) does not.

With regard to armed bystanders, in 9 of 63 shootings armed individuals (often police officers) were present. In several cases armed individuals became victims in the shooting, and the presence of armed individuals did not prevent the shooting from taking place. However, this analysis is by definition incomplete – this is an analysis of shootings that actually did take place, and doesn’t include data on shootings that were stopped by armed individuals. The evidence here suggests that the element of surprise may render concealed weapons somewhat ineffective, but this is not a conclusive finding.

The Simple Arithmetic of High Capacity Gun Magazines

In the wake of yet another mass shooting tragedy today, let’s examine the costs and benefits of high capacity gun magazines. I previously examined the cost-benefit of private gun ownership in the US, and noted at that time that the extraordinarily negative cost-benefit ratio might eventually become an issue for the pro-gun lobby (the industry generates economy-wide economic losses of over $15B/year) [1].

High capacity magazines [2] seem to have become a feature of virtually every recent mass-shooting in the US [3]. How many lives might have been saved by eliminating high-capacity magazines? Let us conservatively assume 10 deaths per year might be reduced through this policy (a rounding error compared to the roughly 10,000 annual gun homicides in the US). The economic value of 10 lives can be estimated at $80 million, while the annual sales revenue of high-capacity magazines might be less than $20 million (since gun magazine sales are a tiny fraction of gun sales, and magazines can be had for as little as $15) [4].

Measuring tragedy on an economic basis might seem crass, but it helps establish a key point: not only are high capacity magazines empowering individuals in mass shootings – but they are also provably hurting America as a whole, as they subtract value from our nation! An outright ban on possession of high capacity magazines is thus a reasonable step to limit further damage to America’s citizens and economy.

Let me address a number of potential criticisms here:

  • Would-be mass shooters will acquire weapons and high-capacity magazines illegally, so you are only affecting law abiding citizens. Actually, 75% of weapons used in mass shootings were acquired legally, and recent shooters acquired their weapons legally. Most of these shooters had no previous criminal record, so in the event high-capacity magazines were illegal, it’s unlikely that they would even know how to find them illegally.
  • Banning high-capacity magazines would have no effect on death rates, as shooters would simply reload. In the Gabrielle Giffords shooting, the gunman was stopped in his rampage once he stopped to reload. Reducing magazine capacity to 10 rounds reduces total firing capacity – this is simple arithmetic. In both of these shootings and many other incidents, lives would have been saved. For that matter, lives might be saved in incidents like drive-by shootings where the rapid fire of multiple rounds makes victims of innocent bystanders.
  • High capacity magazines are needed for self-defense. Even the police rarely find need to fire large numbers of rounds. Is there even one documented case of self defense where the potential victim needed more than 10 rounds to deter his attackers? There are outliers in everything, but I’d be surprised to hear of such a case.
  • I have a 2nd-Amendment right to whatever capacity magazine I like. The recent Supreme Court case upholding an individual right to a firearm also upheld the right to ban American citizens’ access to fully automatic weapons, grenades, tanks, and all other manner of military weapons. Even Justice Scalia admits that there are restrictions on the 2nd Amendment. Your right to purchase whatever weapon you like has long since been curtailed, and the government retains the right to enact reasonable restrictions on access to arms.

 

[1] Using more recent numbers on the economic value of human life at $8M per life, the gun industry may actually cause annual economic losses in the US of $200B per year (8M * 30k lives lost – economic value of gun trade). I republished the more conservative estimate above to remain consistent with the original analysis that I referenced.

[2] I am defining high-capacity magazines as those holding more than 10 rounds, as defined in the original assault weapons ban.

[3] Limiting gun capacity would have reduced casualties in a number of recent tragedies:

[4] Gun sales are estimated to have reached an annual rate around 12 million this year. If separate high-capacity magazine sales are in the neighborhood of 10% of all gun sales, and magazines cost around $15, then total annual revenue from this business might be 1.2M * 15 = $18M. This is an imprecise estimate, since gun sales are not tracked, but conveys the order of magnitude, and illustrates the tiny economic benefit supplied by this particular product relative to its cost in human life.

The Easy Way To Stop Illegal Immigration

Stopping most illegal immigration is easy.

You don’t need border fences.

You don’t need laws with questionable Constitutionality.

You don’t even need to round anyone up.

The simple answer: Penalize businesses that hire undocumented workers.

In attempting to find a solution to illegal immigration, it’s worth studying the root cause of the great majority of illegal entry into the United States. Individuals from poorer countries, mainly Mexico, want to work in the United States. Per-capita GDP in the US is roughly four times that in Mexico, so it’s easy to see why labor is trying to flow towards employment.

If illegal immigrants come to the US to find work, then the easiest way to stop illegal immigration is to remove that incentive. Federal and state governments can easily step up enforcement against businesses which hire undocumented workers, and can increase the fines to the point that it is uneconomical to hire illegal workers. Once the cost of hiring an undocumented worker exceeds that of hiring a documented worker, businesses will naturally follow the profit motive.

The Obama administration has accelerated business audits, quadrupling the previous administration’s efforts in that area. If employer audits were expanded and targeted at those sectors known to use illegal labor most heavily, demand for illegal labor would drop immediately. That in turn would decrease the number of would-be employees crossing into the US, as job opportunities thin out.

Effective enforcement of employment law, even against small businesses, would significantly reduce new illegal immigration. Once the flow of illegal immigrants is slowed from the current 500,000 per year to a trickle, an answer for how to deal with the 12 million among us today can be sought. But until businesses find that hiring illegal workers is unprofitable, the immutable laws of capitalism will cause laborers to find their way to the jobs.

America’s Prison Problem

Why does the United States lead the world in both total prisoners and prisoners per capita? The United States had a prison population of 2.4 million in mid-2008, greater than that of any other country, including China. Our per capita imprisonment rate of 750 per 100,000 individuals is several times greater than all other developed nations. It costs US taxpayers roughly $70 Billion per year to care for all of its prisoners, at a per-prisoner cost of roughly $30,000 per year [1]. While this accounts for feeding, housing, guarding, and providing health care for prisoners, it does not account for the economic activity lost with so many held outside of society. Can anything be done to mitigate the tremendous cost and growth rate of America’s prisons without compromising public safety?

The American prison population has grown rapidly over the last several decades, from 500,000 in 1980 to 2.4 million today, while the overall population has grown by only 33% over the same period [2]. As a result of the sheer volume of prisoners and the prison population growth rate, incarceration is now one of the largest costs borne by taxpayers, after defense, health care, and retirement benefits.

How can the US reduce the total cost of incarceration without risking public safety? Roughly half of all US prisoners were imprisoned for non-violent offenses, and imprisoning these ponzi-schemers, drunk drivers, and pot heads provides little benefit. Why not fine them heavily and simply monitor their probation via ankle bracelet? Law-abiding Americans would be better off if the million non-violent offenders behind bars instead were forced to pay financial restitution for their crimes. If even half of these non-violent offenders stayed in the work force, the net benefit to US taxpayers would be roughly $60 Billion per year, including both prison cost reductions and increased economic activity [3].

If common sense doesn’t bring elected officials to explore other forms of punishment for non-violent offenders, then exploding state and federal budgets will force the issue. Witness California, where a federal judge is calling for the release of 43,000 California prisoners to reduce overcrowding. California lacks the funds needed to properly house its prisoners, so it will have to take a hard look at other forms of punishment. Why not use harsh fines and probation to punish non-violent offenders, thereby earning the state money, saving tax dollars, and keeping the economy more productive at the same time?

[1] According to the New York Times, the annual cost to house a prisoner varies widely by state ($12,000 to $45,000), but is rising rapidly nationwide due to rising health care costs. If we assume $30,000 per prisoner per year as a mean, then it costs $72 Billion annually to incarcerate 2.4 million prisoners.

[2] Bureau of Justice Statistics data shows that the prison population nearly quintupled from 1980 to 2008 (up 380%), while Census data show that the US population rose only 33% during the same period. The prison population has grown at ten times the rate of the population over the period.

[3] Taxpayers would directly save around $35 Billion annually if the prison population were halved by releasing non-violent offenders into probation. If half of the non-violent offenders were able to gain employment, these 600,000 employed workers would contribute roughly $25 Billion annually to the economy (assuming average US per capita income). The total net benefit to the economy would be around $60 Billion per year.

List of Metro Areas By Cost Effectiveness (Adjusted Income)

How cost-effective is your city? More precisely, how well does your hometown rank in median income when incomes are adjusted for the local cost of living? This combination of qualities can be thought of as the “cost-effectiveness” of a city, as measured by adjusting income for cost of living. A number of news sources produce “best cities” lists, and Kiplinger Magazine’s list enables a simple calculation of cost-effectiveness, since it publishes both median income and a cost-of-living index for each city [1]. The ranking of the 50 largest cities in the US by cost-effectiveness (median income / cost of living) is provided below:

Metro Area Cost of Living Index [2]
Median Household Income Adjusted Income [3]
1. Atlanta-Sandy Springs-Marietta, GA 0.94 57307 60965
2. Indianapolis-Carmel, IN 0.88 52607 59781
3. St. Louis, MO-IL 0.87 51713 59440
4. Washington-Arlington-Alexandria, DC-VA-MD-WV 1.38 81163 58814
5. Dallas-Fort Worth-Arlington, TX 0.92 53748 58422
6. Austin-Round Rock, TX 0.94 54827 58327
7. Houston-Sugar Land-Baytown, TX 0.89 51685 58073
8. Cincinnati-Middletown, OH-KY-IN 0.9 51926 57696
9. Denver-Aurora, CO 1.01 58039 57464
10. Nashville-Davidson–Murfreesboro–Franklin, TN 0.88 49979 56794
11. Kansas City, MO-KS 0.95 53564 56383
12. Charlotte-Gastonia-Concord, NC-SC 0.92 51702 56198
13. Salt Lake City, UT 0.98 55064 56188
14. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 1.03 57831 56147
15. Minneapolis-St. Paul-Bloomington, MN-WI 1.14 63866 56023
16. Columbus, OH 0.94 51687 54986
17. Hartford-West Hartford-East Hartford, CT 1.19 64989 54613
18. Jacksonville, FL 0.94 51269 54541
19. Las Vegas-Paradise, NV 1 54299 54299
20. Seattle-Tacoma-Bellevue, WA 1.14 61740 54158
21. Richmond, VA 1.05 56277 53597
22. Detroit-Warren-Livonia, MI 1 53593 53593
23. Phoenix-Mesa-Scottsdale, AZ 1 52857 52857
24. San Francisco-Oakland-Fremont, CA 1.37 72059 52598
25. San Jose-Sunnyvale-Santa Clara, CA 1.58 82664 52319
26. Chicago-Naperville-Joliet, IL-IN-WI 1.13 58946 52165
27. Birmingham-Hoover, AL 0.9 46667 51852
28. Boston-Cambridge-Quincy, MA-NH 1.29 66870 51837
29. Louisville-Jefferson County, KY-IN 0.89 46095 51792
30. Memphis, TN-MS-AR 0.86 44495 51738
31. Baltimore-Towson, MD 1.21 62524 51673
32. Sacramento–Arden-Arcade–Roseville, CA 1.15 58480 50852
33. Orlando-Kissimmee, FL 0.98 49789 50805
34. Milwaukee-Waukesha-West Allis, WI 1.02 51669 50656
35. New York-Northern New Jersey-Long Island, NY-NJ-PA 1.21 60964 50383
36. Rochester, NY 0.99 49508 50008
37. San Antonio, TX 0.93 46203 49681
38. Virginia Beach-Norfolk-Newport News, VA-NC 1.1 54442 49493
39. Oklahoma City, OK 0.89 43652 49047
40. Pittsburgh, PA 0.92 44814 48711
41. Buffalo-Niagara Falls, NY 0.93 44747 48115
42. Cleveland-Elyria-Mentor, OH 0.99 47600 48081
43. Providence-New Bedford-Fall River, RI-MA 1.16 54064 46607
44. San Diego-Carlsbad-San Marcos, CA 1.32 60970 46189
45. Portland-Vancouver-Beaverton, OR-WA 1.17 53935 46098
46. Tampa-St. Petersburg-Clearwater, FL 0.99 45243 45700
47. Riverside-San Bernardino-Ontario, CA 1.23 54991 44708
48. New Orleans-Metairie-Kenner, LA 1.06 45802 43209
49. Los Angeles-Long Beach-Santa Ana, CA 1.42 56680 39915
50. Miami-Fort Lauderdale-Pompano Beach, FL 1.2 47527 39606

Atlanta tops the list, followed by Indianapolis, St. Louis, Washington D.C., and Dallas. Rounding out the top 10 are Austin, Houston, Cincinnati, Denver, and Nashville. What city holds the unfortunate designation of being least cost-effective? Miami/Ft. Lauderdale is dead last, with Los Angeles, New Orleans, Orange County (California), and Tampa/St. Petersburg all in the bottom 5.

It clearly pays to live in Atlanta or the other top cities, as higher incomes and lower costs translate into a higher quality of life or simply greater net savings. The cities at the bottom of the list generally suffer from high real estate prices and rental costs coupled with lower median incomes.

[1] Here’s the full spreadsheet of data from Kiplinger.com including 300+ metro areas.

http://www.kiplinger.com/tools/bestcities_sort/index.php?sortby=hhi&sortorder=DESC

[2] The Cost of Living Index in Kiplinger.com’s original list is set so that the average cost of living in the US is 100. Here I have divided the Kiplinger index by 100 so that it can be more easily used in the Adjusted Income calculation.

[3] The Adjusted Income, or cost-effectiveness, is calculated by simply dividing a city’s median income by its cost of living (when the cost of living is a ratio centered around 1 as discussed above).

How to Balance the Federal Budget

Can the US federal budget be balanced? It is obviously physically possible to balance the budget by either lowering spending, raising taxes, or a bit of both. But can the budget be balanced in a manner that is fiscally prudent while maintaining adequate funding for government’s most important operations?

I have attempted to balance the 2008 budget below while obeying the following constraints:

  1. No tax increases
  2. No spending shifts between departments, only spending cuts
  3. All spending, including entitlements spending, is fair game

The actual federal deficit for 2008 was $459 Billion, which forms the goal for the cost cutting exercise outlined in the table below [1].

Category 2008 Spending ($Billions) Proposed Cuts Proposed Spending
Defense 612 Cut by $150 Billion, maintaining US defense spending at a level that exceeds the entire World excluding NATO. [2] 462
Social Security 612 Phase out social security benefits for upper income seniors, cutting roughly $110 Billion annually. [3] 500
Medicare + Medicaid 587 Introduce 20% coinsurance for medical spending above $40,000 per year for Medicare and Medicaid recipients, saving $110 Billion. End Medicare Advantage subsidies, saving $17 Billion. [4] 460
Non-defense Discretionary 508 Make an across-the-board 9% cut in non-defense discretionary spending, saving $46 Billion. [5] 462
Other Mandatory Programs [5] 411 End agricultural commodity subsidies and crop insurance subsidies, saving $15 Billion. Modify student loan programs to cut out private middlemen, saving $9 Billion. [6] 387
Interest Payments 253 This cannot be cut without a US government default. 253
Totals 2,983 459 2523

As the table shows, the US federal budget cannot be balanced without deep cuts in Medicare/Medicaid, Social Security, and the Department of Defense. Roughly 60% of the budget is allocated to these major programs, making a balanced budget impossible without reductions here.

A rationale for each major budget cut is provided in the footnotes below. I invite readers to share their balanced budgets as well, or to suggest changes in the cuts that I’ve suggested. Just make sure that the numbers add up, as cutting $459 Billion from the federal budget is harder than it looks!

[1] The core budget data for the table comes from Table S-3 of the US Budget Summary Tables. The 2010 budget document is used, as actual spending for 2008 is not available in earlier versions. The 2009 fiscal year data is incomplete, and also has significant one-time items like TARP and Stimulus package spending, so I chose to focus on the finalized 2008 numbers instead.

[2] The US defense budget represents almost 50% of the entire world’s defense spending, leaving ample room for cuts without jeopardizing US security. Over time the US defense apparatus has become particularly bloated, and cuts may actually improve the DoD’s efficiency over time. It’s worth noting that the US won the Cold War with much lower defense budgets than today.

[3] Social Security was enacted to ensure that American seniors did not starve in their last years, but later grew into a mandatory retirement program. Cutting Social Security payments to upper income seniors would bring the program closer to its original goal. There are 5 million senior households with income greater than $50,000, and they represent the top 20% of all seniors in income terms. These seniors likely draw maximum social security benefits, around 30k annually if there is slightly more than one senior per household on average.  Phasing out these benefits for the wealthiest 20% of seniors would save around $110 Billion. Gross benefits reductions would be around $150 Billion (5 million * 30,000), with an offsetting loss of tax revenue from the reduction in benefits.

[4] Along with defense spending, Medicare and Medicaid are the fastest growing parts of the federal budget.  Since government resources are limited, government benefits must also be limited. Medicare and Medicaid spending can be contained by requiring individuals to pay 20% of their own health care bills beyond $40,000 per year. This change would affect only 5% of Medicare recipients, but would yield huge savings as many patients would decline expensive treatments once cost became a consideration. 32% of all Medicare spending occurs above the $40,000 line; if requiring coinsurance cut this in half, roughly $110 Billion would be saved. This analysis assumes that the breakdown in Medicaid spending is similar to that of Medicare.  An additional $17 Billion annually could be saved by ending subsidies to Medicare Advantage, which is part of current health care reform proposals under debate.

[5] Non-defense discretionary spending includes almost all other federal departments. A 10% across-the-board cut would force all departments to shrink and increase efficiency. Alternately, targeted cuts could be used to shrink certain programs, but these cuts would still have to total $51 Billion annually. Health care cost growth could be reined in through heavy cuts at the NIH, which heavily subsidizes health care and pharmaceutical research. Cutting NIH’s $30 Billion budget in half would enable other departments to get by with a 6% cut instead. One more alternative would involve eliminating Congressional earmarks, which would reduce spending by $20 Billion.

[6] Other Mandatory Programs includes federal funding for food stamps, unemployment insurance, farm subsidies, student loans, veterans’ benefits, and other miscellaneous programs written into law with automatic spending formulas. Farm subsidies in particular deserve heavy cuts, as they distort the economy while worsening Americans’ health. Eliminating commodity crop payment programs and crop insurance subsidies would save $15 Billion annually (see page 4). An additional $9 Billion in savings is possible through the removal of middlemen in federally-backed student loans. Since the federal government assumes all risk on these loans, there’s no reason to compensate private banks to issue the loans.

The Mystery of Health Care Pricing

Many economists, think tanks, and politicians have been agitating for more consumer-driven health care in the US. They argue that if consumers have to spend their own money for care, they will tend not to waste health care resources, and they will shop around for cost-effective care. The first part of this argument appears valid, as individuals will always spend their own money most carefully. Studies have validated this hypothesis, showing that individuals with high-deductible insurance and health savings accounts (HSAs) tend to spend less than those on traditional insurance.

But are individuals able to shop for health care in a competitive marketplace? Personal experience and numerous reports indicate otherwise. In the US, most health care providers can’t tell you the price of any particular health care service until after it’s been performed! I recently shopped around for a health care service, and called four doctors’ offices in total. One office told me that they “aren’t allowed to provide that sort of information.” Two more offices were flabbergasted, and attempted to ease their way out of the conversation. Only one office was able to answer with an actual price quote.

Why is this so difficult for medical providers? Virtually all chargeable medical services have associated CPT Codes, which are defined by the American Medical Association [1]. Hospitals, labs, and most medical practices have a chargemaster, which is essentially a price list. Even small practices without explicit chargemasters know the rate their doctor charges for his time. When insurers and medical providers negotiate payment structures, they negotiate using the chargemaster rates (and usually Medicare rates) as starting points for negotiation.

The currently proposed health care reform plans have missed this essential element: require all health care providers to publish standardized price lists, and market competition can begin [2]. For doctors, a simple hourly rate should be enough to satisfy this requirement. Hospitals and labs should be required to initially publish online price lists for their most common charges, with the list expanding over time. While this information is irrelevant to patients in emergency situations, the great majority of health care spending is pre-planned [3].

Put another way, why not include a mandate on medical price lists as part reform? The cost of the mandate to providers is extremely low, as the information is available, and publishing the information online eliminates distribution costs. While price transparency is making slow progress, Congress has an opportunity to make this happen, and should do so as part of the health care reform package.

[1] The AMA would likely be a primary opponent of free publishing of CPT code-based price lists, since it derives signicant ($70M per year) income from its copyright on CPT codes. If the government is to open up the pricing market, it may have to break this monopoly by buying the copyright at fair value and putting it in the public domain.

[2] Consider a scenario in which all doctors are required to provide price lists. Since most small practices would find this difficult, they might just quote a maximum hourly charge. One surgeon might quote $1000 per hour, and another $2000 per hour. And there you have it, competition on price can begin, just as it occurs for plastic surgery, Lasik, and other out-of-pocket services today!

[3] According to the Kaiser Family Foundation, roughly 70% of health care expenditures are non-hospital expenses. Since many hospital expenses are planned, it appears that significantly less than 30% of health care expenses are emergencies in which consumers have no choice of provider. According to ACEP, only 3% of health care costs are emergency-related.