Burton A. Weisbrod

John Evans Professor of Economics
Faculty Fellow, Institute for Policy Research
Northwestern University
PhD, Economics, Northwestern University, 1958
b-weisbrod@northwestern.edu
Curriculum Vitae

Weisbrod has written or edited 15 books and nearly 200 articles and papers on the economics and public policy analysis of nonprofit organizations, education, health, the causes and consequences of research and technological change in health care, poverty, manpower, public interest law, the military draft, and benefit-cost evaluation. His most recent research examines the comparative economic behavior of for-profit, government, and private nonprofit organizations, and the causes and consequences of the growing commercialism of nonprofits. His latest book is To Profit or Not to Profit? The Commercial Transformation of the Nonprofit Sector (Cambridge University Press, 1998). Also the author of The Nonprofit Economy (Harvard University Press, 1988), he is currently completing a book tentatively titled Mission, Money, and the Business of Higher Education, co-authored with Jeffrey Ballou and Evelyn Asch.

Weisbrod served as a senior staff economist on the Council of Economic Advisors to presidents John F. Kennedy and Lyndon B. Johnson. He consults widely for governments, foundations, nonprofit organizations, and private firms in the United States and abroad.

From 1990 to 1995, Weisbrod served as director of Northwestern University's Institute for Policy Research (IPR), then known as the Center for Urban Affairs and Policy Research. At the University of Wisconsin-Madison, where he spent 26 years on the economics faculty before coming to Northwestern, he founded and directed the Center for Health Economics and Law and co-founded and directed the Training Program in Health and Mental Health Economics, supported by the National Institute of Mental Health. His elected positions include membership in the Institute of Medicine, National Academy of Sciences, fellow of the American Association for the Advancement of Science, in addition to being elected to its Governing Council for the 1998-2000 term, Executive Committee of the American Economic Association, and president of the Midwest Economics Association.

Weisbrod was appointed by then-Secretary of Health and Human Services Donna Shalala to the National Advisory Research Resources Council of the National Institutes for Health for a four-year term from 1999 to 2003. From 2000 to 2005, Weisbrod was chair of the Social Science Research Council (SSRC) Committee overseeing its program on Philanthropy and the Nonprofit Sector; from 2002 to 2005 he was a member of the National Academy of Sciences Panel on the Measurement of Nonmarket Activity, and in 2005 he became a member of the new IRS User Group Advisory Committee.

Other honors include being recipient of the Lifetime Distinguished Research Award from the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA) in 1997, being named Phi Beta Kappa Visiting Scholar for the 1998-99 academic year, and receiving, in 1993, the Carl Taube award from the American Public Health Association for his collaborative research on evaluation of community mental health programs.

Current and Recent Projects

Reward Structures and Economic Behavior in the Hospital and Hospice Industries. This project investigates whether nonprofits establish incentives (reward structures) that cause their workers to behave differently than those in governmental or for-profit organizations. In a series of studies of the hospital industry, Weisbrod is using a unique data set that contains information on base-salary and performance-based bonus compensation covering more than 50 job types in 1,100 hospitals nationally. He is using these data to analyze differences in nonprofit use of performance-based bonuses relative to the other organizational types, as well as the criteria hospitals use for rewarding "good" performance.

Another component of the project is examining compensation patterns for CEOs and other senior executives, as well as lower levels of the managerial and technical worker ladder. This collaborative research, with Jeffrey Ballou of Northeastern University and IPR graduate fellow Burcay Erus, is finding substantial differences in incentive structures for CEOs across institutional forms, but none at middle management or technical worker levels. During the 1992-97 period when cost-containment pressure was mounting for hospitals, Erus and Weisbrod—focusing on governmental relative to nonprofit hospital behavior—found materially different compensation structures among these organizations, all of which are subject to a "nondistribution" constraint on their managerial rewards.

In the hospice industry, which is also characterized by a mixture of nonprofit and for-profit providers, Weisbrod and former Northwestern University research professor Richard Lindrooth are testing hypotheses regarding the differential responses of these varied providers to financial incentives coming from the Medicare program. In particular, they are studying the responses to incentives that implicitly encourage earlier admissions and hence, longer lengths of participation, in hospice programs.

The Mixed Higher Education Industry. Ballou and Weisbrod are working on a book based on the premise that to understand behavior of the higher education industry, one must recognize the distinct roles of the diverse institutional forms that comprise it. The book proposes to provide a framework for understanding many of the changes currently taking place in the higher education industry, and particularly its increasing commercialization—that is, the narrowing gap between the choices made by traditional nonprofit and public universities relative to those made by profit-maximizing firms. It will address such issues as the causes and consequences of the rapid rise of for-profit higher education, the development of distance learning programs by all three organizational forms, and the impact of increasing cost pressures, and the resulting search for new sources of revenue on universities' core missions.

Monitoring Government Contractors. Many of the traditional tasks of government— providing for defense, educating children, rehabilitating prisoners—are now outsourced to private firms, both for-profit and nonprofit. In many communities across the country, for example, public schools are now managed by for-profit firms, and privately managed, for-profit prisons now exist in more than half the states. The federal government contracts with civilian firms like Brown and Root to provide the military with logistical support, and President Bush has suggested that social services might better be provided by "faith-based" institutions. In many of these relationships, outputs are very hard to monitor reliably. Higher test scores coupled with a profit for the management company, for example, might or might not show that a school is "improving." Research by Weisbrod and Erus looks at the monitoring problem from the input side: What rewards and penalties (i.e., incentives) are evident in the contracts between government agencies and the private firms that perform an increasing array of activities that were once the primary domain of government? By examining those incentives, looking particularly at privately managed jails, this research attempts to provide fresh insight on the changes in the historical division of responsibility among the for-profit, governmental, and nonprofit sectors.

Behavior of Nonprofit Organizations. Weisbrod and Maxim Sinitsyn, a graduate student in economics, are completing a study of the behavior of nonprofit organizations in for-profit markets examining profitability of commercial activity in six nonprofit sectors including health and education. One of the goals is to explain the widespread and sustained unprofitability reported in activities that appear to have no justification other than to reap profit.

Under Weisbrod's direction, several Northwestern undergraduate students have studied the behavior of nonprofit organizations in specific industries. Northwestern alumus Ankit Mahadevia, now in medical school at Johns Hopkins, analyzed data for all California hospitals over a 20-year period to determine whether provision of "collective" goods such as research, education, and charity care differs systematically among for-profit, nonprofit, and public hospitals, as well as between church-related and secular nonprofits. A paper is now in progress. Weisbrod is continuing work, initiated with Jaime Baim, a June 2001 graduate, that investigates behavioral differences among for-profit, nonprofit, and governmental hospitals in their use of autopsies as a research instrument and as part of medical education. Recent NU graduate Sina Foroohar continues working with Weisbrod on the nonprofit symphony orchestra sector, studying the association between an orchestra's revenue sources and the kinds and popularity of music it chooses to perform. Senior Joseph Konopka is examining the effect on the quality of academic scientific publication of the growing dependence of universities on private sector research funding.

Selected Publications

Books

Weisbrod, Burton W., ed. To Profit or Not to Profit: The Commercial Transformation of the Nonprofit Sector (Cambridge University Press, 1998). Editor and author or co-author of eight of the 15 chapters.

Weisbrod, Burton W. The Nonprofit Economy (Harvard University Press, 1988).

Weisbrod, Burton W., with James C. Worthy, eds. The Urban Crisis: Linking Research to Action (Northwestern University Press, 1997).

Scholarly Articles

Weisbrod, B. W., with J. P. Ballou. 2003. Managerial rewards and the behavior of for-profit, governmental, and nonprofit organizations: Evidence from the hospital industry. Journal of Public Economics 87(9): 1895-1920.

Weisbrod, B. W., with L. M. Segal. 2002. Volunteer labor sorting across industries. Journal of Policy Analysis and Management 21(3): 427-47.

Weisbrod, B. W., with B. Erus. 2003. Objective functions and compensation structures in nonprofit and for-profit organizations: Evidence from the "mixed" hospital industry. In The Governance of Not-for-Profit Firms, E. Glaeser, ed., 117-42. Chicago: University of Chicago Press.

Weisbrod, B. W. 2002. An agenda for quantitative evaluation of the nonprofit sector: Need obstacles and approaches. In Measuring the Impact of the Nonprofit Sector on Society, P. Flynn and V. A. Hodgkinson, eds., 273-90. New York: Kluwer Academic/Plenum.

Weisbrod, B. W., with K. Kapur. 2000. The roles of government and nonprofit suppliers in mixed industries. Public Finance Review 28(4): 275-308.

Weisbrod, B. W., with C. Okten. 2000. Determinants of donations in private nonprofit markets. Journal of Public Economics 75(2): 255-72.

Weisbrod, B. W., with M. J. Roomkin. 1999. Managerial compensation and incentives in for-profit and nonprofit hospitals. The Journal of Law, Economics and Organization 15(3): 750-81.

Weisbrod, B. W., with C. LaMay. 1999. Mixed signals: Public policy and the future of health-care R&D. Health Affairs 18(2): 112-25.

Weisbrod, B. W., with J. H. Goddeeris. 1999. Why not for-profit? Conversions and public policy. In Government and Nonprofit Organizations: The Challenges of Civil Society. E. T. Boris and C. E. Steuerle, eds, 235-65. Washington, D.C.: The Urban Institute.