Sometimes, the best way to understand an idea is to meet the people who devote their time and energy to studying it.
The Institute’s mission to conduct and promote research that will advance economic opportunity and inclusive growth for all Americans means engaging with a diverse group of scholars who approach opportunity and inclusion from many angles. This series of short Q&As spotlights those individuals, what led them to economics, and how their research connects to opportunity and inclusion. Plus: the most useful ideas in economics, abandoned projects, podcasts, and economists to lunch with.
For this installment, Institute Writer Lisa Camner McKay sat down with Kevin Rinz, an economist at the U.S. Census Bureau, to discuss physicians’ earnings, the importance of economics in policymaking, and living in the moment.
What made you decide to study economics? Have you always wanted to be an economist, or if not, what led you to discover economics?
When I started college, I planned to major in math and then find something else to do with that. Then I took some of the introductory econ classes, and I discovered that I liked economics. So that became the “something else” I was going to major in. The thing that made me actually decide to become a researcher rather than do consulting or finance or whatever was an internship on Capitol Hill between my sophomore and junior years. I think what I absorbed while being there and watching people do what they were doing is that, despite the fact that so many people there went to law school, a lot of what they were doing was economics. So what I took away from that was, if they’re all doing economics, why not become an economist instead of a lawyer?
What do you think is one of the most useful or powerful ideas in economics?
Maybe this one is kind of cheating because it encompasses a couple ideas, but what I think of is the idea of making decisions at the margin. It’s good to be thinking about what you will get out of the next little bit of whatever you’re doing, rather than trying to evaluate whether the full history of whatever it is was worth it. For example, you can help avoid the sunk cost fallacy by thinking at the margin. If you’re thinking at the margin, you are probably also thinking about opportunity costs. If you’re thinking about the best way to spend your time, you are necessarily thinking about what other things you might do with your time. I think this a powerful idea that is central to economics.
Do you have a specific example of making decisions at the margins?
I never ended up getting my job market paper published. And in part that was because it didn’t seem that getting that paper over the finish line was going to be high in value relative to the other things I might spend my research time on. I had just started my job at the Census Bureau, where I had access to all sorts of new and interesting data sets. Did I want to spend a lot of time polishing an old paper that had already served its purpose? Or would I rather dive into something new and interesting? I decided that it made more sense to move on and start exploring the new stuff I had access to.
So what are you studying now?
A lot of different things! For most of 2021 and into 2022, I was working at the Council of Economic Advisers. Right after that, I was on parental leave, so there was about a year and a half where I wasn’t doing my own research. Since then, I’ve been picking back up the projects that I had set aside. So there’s a lot of stuff that was ongoing. I have a project about how much physicians get paid, which is part of an agenda to understand the health care labor force.
Can you tell me more about that project? Why is that an interesting question, and why is physician income information not readily available in government datasets?
We spend a lot of money on health care in the United States, and a good chunk of that goes to compensating health care providers. Physicians are the highest-paid health care providers. Surveys that ask people about their income have a hard time capturing the top of the income distribution—sometimes people are hesitant to share their earnings in surveys, especially when they’re very highly paid. And so a survey of doctors about how much they make probably substantially understates their actual earnings because of the way people tend to respond to surveys.
There are also issues related to what people think of when you ask them about their income. Do they think only about their wages, or do they think about their wages plus the profit they’ve been paid from their practice plus other sources, such as getting paid to give a talk at a conference or something. So what we’ve done is take a bunch of information we have about who is a physician and connect that with data from tax returns. This gives us what we think is a more accurate, more reliable measure of how much money the physicians in our sample are getting paid. It turns out that comparing our data to survey responses shows that the surveys do substantially understate physicians’ earnings.
Another reason that the earnings of physicians are interesting more broadly than this idiosyncratic measurement question is that the government is a significant purchaser of health care services through programs like Medicare and Medicaid. And so there is a lot of scope for decisions that the government makes about how to compensate physicians to have an impact on the composition of the top tail of the income distribution. So we consider a few different changes in government payment policies and see if they impact physicians’ earnings. And it does seem like there’s a meaningful role for government in influencing how much physicians get paid.
What do you plan to work on next?
One area that I’m always interested in trying to study more is how employers exercise wage-setting power in their labor markets.
I’ve done a little bit of work in this area already. I have a paper about how local labor market concentration has changed over time and its effects on wages for workers. But there are a lot of other questions in this area that I’m interested in. One very preliminary idea is whether pay transparency policies, like the requirement that firms post wage ranges on job ads for example, might help mitigate this kind of “monopsony power,” or wage-setting power, that employers have in some cases. I think that is an interesting possibility. Those policies are still pretty new. There’s not that many jurisdictions that have them, and they haven’t been around for that long yet. So that will be interesting to try to learn more about in the future.
How does your research relate to economic opportunity and inclusion?
If I had to come up with one way of characterizing the kinds of research I’m interested in, it would be that I’m interested in understanding how policy can help people succeed in the labor market. Labor income is a big part of the vast majority of people’s income. And if we have labor market institutions or policies that are generating inequality and disadvantaging some groups in the labor market relative to others, then I think that’s an area in which research can help us identify places we can bring the labor market back into a state where people are better served by its policies and institutions.
Is there an important economic statistic that you think is surprising or that you think people should know?
One thing that I think people would do well to appreciate as they’re paying attention to labor market indicators is what underlying movement or trends in the labor market those numbers really represent. For example, in August we added about 300,000 payroll jobs. But that 300,000 growth was a product of 6.3 million hires and 6 million separations. So seeing that we added 300,000 jobs, people might think that’s a large number or just an okay number, but it’s a product of other much larger numbers.
There’s always a lot going on in the economy, and some of our standard-issue indicators, such as net employment growth, don’t quite capture how much is really happening in a given month. In the early part of the pandemic, we saw some shocking numbers on some of these indicators, but it’s always true that there are a lot of people taking and leaving jobs in any given month. The net change from month to month is interesting, but it doesn’t totally capture all that goes on in the labor market.
Or as another example, throughout the last two years or so, the composition of job separations has been much different than it had been prior. We’ve seen a lot more quits over the course of the last two years than we’ve had for almost as long as we’ve been measuring quits. It’s useful to understand that 5.5 million separations when 3 million are quits is a different story than 5.5 million separations when 4 million are layoffs.
Is there an economist, living or deceased, that you would want to have lunch with, and why would you choose that person?
I think I would probably choose Alan Krueger. He was a kind of economist that I think is rare and really admirable—someone with Nobel-worthy academic talent who also put that ability to use in a policy setting. Alan worked at the Department of Labor, Treasury, and the Council of Economic Advisers. That’s a lot of time dedicated to public service for someone who could have been doing a lot of other things with his time. And I think that’s admirable. On top of that, he worked on a lot of topics that I’m also very interested in.
Do you listen to podcasts, and if so, do you have a favorite?
Yeah, I definitely listen to podcasts, though less now than when I had to commute!
One that I like is called Why Is This happening? It’s hosted by Chris Hayes, who mostly hosts a nightly news show, but he also has this podcast that consists of hour-longish interviews with experts on news-adjacent topics. So it’s not chasing headlines all the time, but it is covering topics that are in the ether a little bit. And he discusses them not with pundits but with people who have some actual subject matter knowledge of whatever is going on. I think they’re usually pretty interesting interviews.
Is there a good piece of advice that you’ve received or encountered along your journey?
I don’t know that I’ve ever actually been given this advice, or if it really counts as advice even, but sometimes if you’re watching sports and somebody’s had a really good game or stretch of games, you’ll hear them interviewed afterwards and the interviewer asks, “So how’d you do it?” And the athlete will say something like, “Oh, you know, I’m just trying to stay in the moment. I’m not trying to focus too much on the highs and lows. I’m taking it one day at a time.”
These are thought of as post-game clichés that avoid the questions, but I think it’s actually kind of good advice. It’s good to focus on what you can do in a situation, whether it’s work or something else. You can only do what you can do. It doesn’t help you to worry too much about other possibilities, things that are already gone and you can’t change. It is helpful I think to try to stay in the moment, to take it one day at a time.
If you could live anywhere, where would it be?
Well, I live in D.C. and the pandemic has made it possible to live anywhere to some extent, and I haven’t moved, so—maybe I like living in D.C.
Right, yeah. Another good economic idea.
But I guess more than a specific place, I would like to live near friends. Lots of places are good. And they get better if you can take advantage of their goodness with other people.
Lisa Camner McKay is a writer/analyst with the Opportunity & Inclusive Growth Institute at the Minneapolis Fed. In this role, she creates content for diverse audiences in support of the Institute’s policy and research work.