Chapter 7: The Empirical Evidence box on Measuring Crowd-Out

has been updated to reflect exciting new studies on this topic.

Chapter 9: The application on Farm Policy in the United States has
been updated and includes a new discussion of the successful approach
to ending agricultural subsidies in New Zealand. The application called
on Government Corruption has been extended to include the recent
case of Governor Rod Blagojevich in Illinois. An interesting new exam-
ple included in the chapter discusses the unintended consequences of
providing public information on Congressional pork.
Chapter 11: A more thorough discussion of empirical research on
competition between private and public schools has been added to the
section on vouchers.
Chapter 12: The application on Flood Insurance and the Samaritans
Dilemma has been updated to discuss recent legislative actions to
reform the problematic flood insurance program.
Chapter 14: The discussion of the moral hazard effects of disability
insurance (DI) is augmented through a discussion of evidence on the
impact of program-screening stringency on labor force and DI
application decisions.
Chapter 15: A new section discusses the distribution of medical spend-
ing in the United States, a new section discusses in more depth the
reasons that individuals end up uninsured, and a new application on
The Problem with McAllen, Texas highlights the important role of
geographic disparities in health care spending and their implications for
cost control efforts.
Chapter 16: A new introduction highlights the debate over health reform
in the 2008 presidential elections.The application on The Medicare
Prescription Drug Debate has been updated to reflect the experience
since 2006 with this major new government program, including the most
recent health economics research. And the entire final section on health
care reform has been updated to reflect both recent developments in
health economics and recent policy developments. A new application on
The Massachusetts Experiment with Incremental Universalism discusses
the innovative health care reform in Massachusetts that has been the
basis for ongoing health care reform efforts in the U.S. Congress.
Chapter 18: In addition to a thorough updating of all facts about tax
collections and the tax code in the United States, a new Empirical
Evidence box on The Social Benefits of Homeownership discusses
the difficult issue of convincingly measuring these benefits.
Chapter 20: I have reintroduced the section on the potential inefficien-
cies of progressive tax systems from the first edition and excised the
discussion of simulated evidence on the optimal income tax. This
change allows students to focus more on the important theoretical
issues in this area.

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