Logistic Regression in Rare Events Data

We study rare events data, binary dependent variables with dozensto thousands of times fewer ones (events, such as wars, vetoes,cases of political activism, or epidemiological infections)than zeros ("nonevents"). In many literatures, these variableshave proven difficult to explain and predict, a problem thatseems to have at least two sources. First, popular statisticalprocedures, such as logistic regression, can sharply underestimatethe probability of rare events. We recommend corrections thatoutperform existing methods and change the estimates of absoluteand relative risks by as much as some estimated effects reportedin the literature. Second, commonly used data collection strategiesare grossly inefficient for rare events data. The fear of collectingdata with too few events has led to data collections with hugenumbers of observations but relatively few, and poorly measured,explanatory variables, such as in international conflict datawith more than a quarter-million dyads, only a few of whichare at war. As it turns out, more efficient sampling designsexist for making valid inferences, such as sampling all availableevents (e.g., wars) and a tiny fraction of nonevents (peace).This enables scholars to save as much as 99% of their (nonfixed)data collection costs or to collect much more meaningful explanatoryvariables. We provide methods that link these two results, enablingboth types of corrections to work simultaneously, and softwarethat implements the methods developed.     

A cure for the Blues: resolving nonprofit Blue Cross conversions

This Article analyzes the issues involved in converting nonprofit Blue Cross organizations to for-profit status. These issues have arisen in the context of litigation regarding the "reorganization" of Blue Cross and Blue Shield of Missouri ("BCBSMo"). BCBSMo had reorganized by creating and transferring a majority of its business to a new for-profit subsidiary. Missouri consumer groups and state regulators characterized the "reorganization" as a conversion requiring BCBSMo to transfer its assets to a foundation dedicated to charitable health purposes. BCBSMo, however, denied that it had any obligation to leave behind its assets in the nonprofit sector. The BCBSMo litigation raises issues common to most conversions of nonprofit healthcare organizations, particularly conversions of nonprofit Blue Cross plans. This Article provides a road map for state regulators and the public to follow in ensuring that the public interest is fully protected in such conversions.