Coffins and Nails
Studying funerals and manicures, two economists focus on how regulations can hurt consumers
What's the connection between Internet casket sales and Vietnamese manicurists? Simple, say economists Kathy Krynski and David Harrington: the effect of regulations that vary from state to state, damping competition and ultimately harming the consumer. "Our central interest is the impact of regulations on consumer choices and market structure," Harrington says. "I don't think there's been enough work done on the impact of state, rather than federal, regulations."
Krynski and Harrington, who came to Kenyon in 1986 and share the Robert J. and Paul G. Himmelright Associate Professorship of Economics, knew that they could not compete directly with big-name economists studying standard data sets. Instead, says Krynski, "We have a comparative advantage in finding new data that can be exploited in an interesting way." After reading The Last Great Necessity: Cemeteries in American History in 1991, Harrington realized that no economists were studying the funeral market. "Both of us have gravitated toward topics that are not conventional for economists, but that grab the attention of undergraduates," Harrington says.
Funeral-industry regulations originally enacted to protect consumers from "curbstoners" (fly-by-night morticians) are now actually hurting them. Most state regulations were written sixty to one hundred years ago, when nearly all funerals included embalming and open-casket viewing. But the popularity of cremation continues to rise, precluding the necessity for embalming or even a casket, and taking a big chunk out of potential profits. The regulations are preventing healthy competition, protecting existing businesses by erecting artificial barriers to entry into the industry. It might take three months to open a new funeral home in California, Harrington says; the same process would take years in heavily regulated Ohio.
The one regulation that Harrington actively approves of is the Funeral Rule (officially, the Funeral Industry Practices Trade Regulation Rule), which really does protect the consumer. Enacted in the wake of the 1963 publication of Jessica Mitford's The American Way of Death, which blasted the price-fixing of the funeral industry and instigated a wave of reforms, the Funeral Rule was designed to ensure that consumers receive a full disclosure and breakdown of all funeral costs.
Because of their research, Harrington was called to testify before the Federal Trade Commission about potential barriers to interstate commerce in casket sales. His testimony in that case has led to a working relationship with one of the Internet companies, Funeral Depot, which has since provided him with all of its sales information-a wealth of new data to work with. Crunching these statistics led Harrington to "stunningly beautiful empirical results" confirming that stringent state funeral regulations stifle funeral-market innovations. "Exactly what they are designed to do," Harrington observes. But changes in the industry are putting increasing pressure on states to reform these laws.
Harrington is increasingly sought as an expert on the funeral market by reporters and lawyers, and future research will certainly include more work with the Funeral Depot data. Krynski and Harrington are also examining the rising number of women becoming funeral directors, and will try to identify more occupations with entry requirements that are low but that might be differentially higher for immigrants.
A primary goal of U.S. immigration policy is the reunification of families. "That's part of the reason our research is so relevant," Harrington says. "Among developed countries, America is really alone in having such a large proportion of low-skilled immigrants. That makes the whole question of whether low-skilled immigrants displace native, often disadvantaged workers, an important issue."
They chose to study Vietnamese manicurists because there were solid data available. According to the 2000 census, 42 percent of manicurists were Vietnamese, and 6 percent of Vietnamese were manicurists-both significant concentrations. Because the profession is licensed, there's a paper trail of the entry and exit of practitioners, although Krynski and Harrington had to collect the data from all fifty states. They were surprised at the results.
"If you have very good data, often the results just sing," Harrington says. They didn't expect to see displacement of native workers, but the research established that two non-Vietnamese are displaced for every five Vietnamese that enter, in a causal relationship. With immigration a hot topic politically, these findings are especially important.
"For a long time, we just did our research," Harrington says. "There are economists that view economics as a value-free science. They never want to cross that line and become an advocate. But there is also a large group of economists who think that our research has implications, that we should state our opinions, just like anybody else." With Tom Firey, managing editor of Regulation at the Cato Institute, Harrington has begun writing op-ed pieces to try to improve public policy.
He sees an added benefit to being at Kenyon. "Maya (Federman, of Pitzer College, a coauthor), Kathy, and I all teach at small liberal-arts colleges, where there's an emphasis on working with students to improve their writing. It's amazing the number of referees [expert reviewers for academic journals] who mention how well-written our papers are. One of the best ways to become a better writer yourself is to help other people become better writers," he says.
Do you have feedback on this page?