nep-hea New Economics Papers
on Health Economics
Issue of 2005‒04‒16
seventeen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Equity, Justice, Interdependence: Intergenerational Transfers and the Ageing Population By Rydell, Ingrid
  2. Non mean reverting affine processes for stochastic mortality. By Elisa Luciano; Elena Vigna
  3. Are the poor too poor to demand health insurance? By Rajeev Ahuja; Johannes Jutting
  4. Health insurance for the poor in India By Ahuja, Rajeev
  5. Healthy Aging at Older Ages: Are Income and Education Important? By Neil J. Buckley; Frank T. Denton; A. Leslie Robb; Byron G. Spencer
  6. Income Inequality and Self-Rated Health Status: Evidence from the European Community Household Panel By Vincent Hildebrand; Philippe Van Kerm
  7. The Value of Statistical Life and the Economics of Landmine Clearance in Developing Countries By John Gibson; Sandra Barns; Michael Cameron; Steven Lim; Frank Scrimgeour; John Tressler
  8. Investing in Hope: AIDS, Life Expectancy, and Human Capital Accumulation By Rui Huang; Lilyan E. Fulginiti; E. Wesley Peterson
  9. Industrialization and Infant Mortality By Maya Federman; David I. Levine
  10. Demand for and Regulation of Cardiac Services By Justin G. Trogdon
  12. The effect of work on mental health: Does occupation Matter? By Ana Llena-Nozal; Maarten Lindeboom; France Portrait
  13. The macroeconomics of obesity in the United States By Peralta-Alva Adrian; Pere Gomis- Porqueras
  14. A Theory of Natural Addiction By Trenton G. Smith; Attila Tasnádi
  15. Heterogeneity, State Dependence and Health By Timothy J Halliday
  16. Business Cycles, Migration and Health By Timothy J Halliday
  17. Medical Savings Accounts in Singapore: How much is adequate? By Ngee-Choon Chia; Albert K C Tsui

  1. By: Rydell, Ingrid (Institute for Futures Studies)
    Abstract: The increase in the ratio of the elderly to the working age population as the demographic transition of low fertility and low mortality proceeds, has spurred a discussion concerning the equity of intergenerational transfers. The central question is if and how the state can afford the pensions and healthcare costs for growing older populations, and who should carry the burden. To a large extent, focus has been on public transfers while neglecting private transfers within families. There is also an obvious tendency of considering the impact of ageing in terms of pensions while health care has gained a lot less attention. A gender approach shows to be fruitful in the analysis of the costs and benefits of intergenerational transfers.
    Keywords: equity; justice; interdependence; intergenerational transfers; ageing population
    JEL: D63 J00
    Date: 2005–03
  2. By: Elisa Luciano; Elena Vigna
    Abstract: In this paper we use doubly stochastic processes (or Cox processes) in order to model the random evolution of mortality of an individual. These processes have been widely used in the credit risk literature in modelling default arrival, and in this context have proved to be quite flexible, especially when the intensity process is of the affine class. We investigate the applicability of affine processes in describing the individual's intensity of mortality, and provide a calibration to the Italian and UK populations. Results from the calibration seem to suggest that, in spite of their popularity in the financial context, mean reverting processes are not suitable for describing the death intensity of individuals. On the contrary, affine processes whose deterministic part increases exponentially seem to be appropriate. As for the stochastic part, negative jumps seem to do a better job than diffusive components. Stress analysis and analytical results indicate that increasing the randomness of the intensity process results in improvements in survivorship.
    Keywords: doubly stochastic processes (Cox processes); stochastic mortality; affine processes
    JEL: G22 J11
    Date: 2005–03
  3. By: Rajeev Ahuja (Indian Council for Research on International Economic Rela); Johannes Jutting (Indian Council for Research on International Economic Rela)
    Abstract: Community based micro insurance has aroused much interest and hope in meeting health care challenges facing the poor. In this paper we explore how institutional rigidities such as credit constraint impinge on demand for health insurance and how insurance could potentially prevent poor households from fallinginto poverty trap. In this setting, we argue that the appropriate public intervention in generating demand for insurance is not to subsidise premium but to remove these rigidities (easing credit constraint in the present context). Thus from insurance perspective as well, our analysis highlights the importance of having appropriate savings and borrowing instruments for the poor.
    Keywords: Micro-insurance, Micro-credit, Credit Constraint, Demand for Insurance
    Date: 2004–01
  4. By: Ahuja, Rajeev (Indian Council for Research on International Economic Rela)
    Abstract: Community based health insurance (CBHI) is more suited than alternate arrangements to providing health insurance to the low-income people living in developing countries. The universal health insurance scheme, launched recently by the Prime Minister of India, is only one of the forms that CBHI can take. While analysing the proposed scheme, we examine alternate forms of CBHI schemes prevalent in the country.The development of private health insurance market in the country will not leave the poor unaffected. Insurance sector reform can affect the poor through its effect on the provision of health services (i.e., cost, quality and access) used by the low-income people as well as through its access to financing of health care. In this paper we also explore how insurance sector reforms alter health insurance prospects facing the poor in India, and what changes on the health front affecting the poor have happened or are likely to happen as a result of insurance sector reforms. We conclude that in diverse settings of India all forms of CBHI have a role to play and therefore need to be encouraged by the government through appropriate interventions. Formal insurance providers can also be reigned to serve low-in comepopulation. At the same time, developments in formal health insurance market need to be guided so as to minimise cost escalation of health care provision
    Keywords: Health Insurance; Low-income people; poverty; risk and insurance; insurance schemes
    JEL: I1 I3 G1
    Date: 2004–03
  5. By: Neil J. Buckley; Frank T. Denton; A. Leslie Robb; Byron G. Spencer
    Abstract: Being higher on the socioeconomic scale is correlated with being in better health, but is there is a causal relationship? Using three years of longitudinal data for individuals aged 50 and older from the Canadian Survey of Labour and Income Dynamics, we study the health transitions for those who were in good health in the first year, focussing especially on income and education. The initial good health restriction removes from the sample those whose incomes may have been affected by a previous history of poor health, thus avoiding a well known problem of econometric endogeneity. We then ask, for those in good health, whether later transitions in health status are related to socioeconomic status. We find that they are that changes in health status over the subsequent two years are related in particular to income and education.
    Keywords: aging, health, income, education
    JEL: I12
    Date: 2004–12
  6. By: Vincent Hildebrand; Philippe Van Kerm
    Abstract: We examine the effect of income inequality on individual self-rated health status in a pooled sample of 10 member states of the European Union using longitudinal data from the European Community Household Panel (ECHP) survey. Taking advantage of the longitudinal and cross-national nature of our data, and carefully modelling the self-reported health information, we avoid several of the pitfalls suffered by earlier studies on this topic. We calculate income inequality indices measured at two standard levels of geography (NUTS-0 and NUTS-1) and find consistent evidence that income inequality is negatively related to self-rate health status in the European Union for both men and women. However, despite its statistical significance, the magnitude of the impact on inequality on health is small.
    Keywords: self-rated health; income inequality; European Union; panel data
    JEL: D63 I12 I18
    Date: 2005–02
  7. By: John Gibson (University of Canterbury); Sandra Barns; Michael Cameron; Steven Lim; Frank Scrimgeour; John Tressler
    Abstract: This paper presents estimates of the Value of Statistical Life (VSL) in rural Thailand using the contingent-valuation (CV) method. These estimates are applied to an economic analysis of landmine clearance. The estimated VSL of US$250,000 suggests that the value of lives saved from landmine clearance is at least an order of magnitude greater than the values used in existing studies.
    Keywords: Asia; Thailand; benefit-cost analysis; contingent valuation; landmines; value of statistical life
    JEL: J17 O22
    Date: 2005–04–01
  8. By: Rui Huang (University of California-Berkeley); Lilyan E. Fulginiti (University of Nebraska); E. Wesley Peterson (University of Nebraska)
    Abstract: A three period overlapping generations model is developed to investigate the impact of shorter life expectancy due to disease, on human capital investment decisions and income growth. This research is particularly relevant to Sub-Saharan Africa given the dramatic reduction in life expectancy due to HIV/AIDS and the potential lasting effects on growth. Our results indicate that as life expectancy shortens so does schooling inducing a lower growth rate of income. These relationships are even more pronounced for the African continent than for the rest of the world.
    Keywords: HIV/AIDS, Africa, life expectancy, growth, overlapping generations.
    JEL: O13 O47 O55
    Date: 2005–02–28
  9. By: Maya Federman (Pitzer College); David I. Levine (Haas School of Business, UC Berkeley)
    Abstract: On average, infant mortality rates are lower in more industrialized nations, yet health and mortality worsened during early industrialization in some nations. This study examines the effects of growing manufacturing employment on infant mortality across 274 Indonesian districts from 1985 to 1995, a time of rapid industrialization. Compared with cross-national studies we have a larger sample size of regions, more consistent data definitions, and better checks for causality and specification. We can also explore the causal mechanisms underlying our correlations. Overall the results suggest manufacturing employment raised living standards, housing quality, and reduced cooking with wood and coal, which helped reduce infant mortality. At the same time, pollution from factories appears quite harmful to infants. The overall effect was slightly higher infant mortality in regions that experienced greater industrialization.
    Keywords: Industrialization, infant mortality, Indonesia, pollution, indoor air pollution
    JEL: O11 O14 O18 O19 I12
    Date: 2005–04–14
  10. By: Justin G. Trogdon (School of Economics, University of Adelaide)
    Abstract: Efforts to regionalize cardiac services can increase access costs for patients. This study quantifies this trade off by estimating the effects of changes in the regulation of hospital services on treatments and outcomes. A demand model for surgery services is specified in which heart attack victims form expectations of the need for and productivity of surgery in their choice of hospital and treatment. The results indicate that mortality is relatively insensitive to moderate changes in policy: changes in travel costs and volume offset one another. Despite similar health outcomes, the competing policies have different implications for taxpayers.
    Keywords: heart attack, Medicare, dynamic discrete choice estimation
    JEL: I12 I18 C35
    Date: 2005–02–03
  11. By: Yavuz Yasar (University of Denver)
    Abstract: This paper investigates the relationship between health care market structure and utilization of preventive care services, namely mammogram and Papanicolaou (Pap-smear) screening. In addition to their life saving aspects, it is always believed that preventive health care services are important due to their cost-effectiveness which would prevail under managed competition. Yet, the nature of managed competition has been changing as a result of the backlash against it since the mid-1990s. We have yet to provide a clear answer to the question of how market structure affects the utilization of preventive care in general, and how the latest changes in health care market have been affecting it. These are the primary research questions of the paper. These research questions are answered by employing a new methodology that has not been used before. A multilevel modeling technique is employed to study the impact of changes in the structure of health care market on the utilization of mammogram and Pap-smear tests. In addition, an unusual data source, insurance claims data, rather than surveys or discharge data, is used in this study.
    Keywords: Mammogram, Pap-Smear, Utilization, Health Care Market, Multilevel Analysis.
    JEL: I
    Date: 2005–03–16
  12. By: Ana Llena-Nozal (Free University Amsterdam); Maarten Lindeboom (Free University Amsterdam); France Portrait (Free University Amsterdam)
    Keywords: mental health panel data model labour market status occupation
    JEL: J
    Date: 2005–01–25
  13. By: Peralta-Alva Adrian (University of MIami); Pere Gomis- Porqueras (University of Miami)
    Abstract: The weight of the average American adult has increased by 12 pounds and obesity rates have doubled since the early 1960s. Recent studies show these changes in weight can be attributed to the dramatic rise in the consumption of prepared food and food away from home. We investigate the role of taxes and the gender wage gap in accounting for the trends in the composition of the food consumed by the average American adult. According to our general equilibrium analysis, the observed movements in the personal income tax rate and in the gender wage gap can account for more than one half of the increased caloric intake, consumption of prepared food, food away from home, and capital specific for cooking activities of Americans. Furthermore, our theory is also qualitatively consistent with the patterns of time use on market and food preparation activities of the data.
    Keywords: Obesity, Price per calorie, Gender wage gap, Taxes, Technological change, general equilibrium, price of food, relative price of food
    JEL: E
    Date: 2005–03–17
  14. By: Trenton G. Smith (Washington State University); Attila Tasnádi (Corvinus University of Budapest)
    Abstract: Economic theories of rational addiction aim to describe consumer behavior in the presence of habit-forming goods. We provide a biological foundation for this body of work by formally specifying conditions under which it is optimal to form a habit. We demonstrate the empirical validity of our thesis with an in-depth review and synthesis of the biomedical literature concerning the action of opiates in the mammalian brain and their e ects on behavior. Our results lend credence to many of the unconventional behavioral assumptions employed by theories of rational addiction, including adjacent complementarity and the importance of cues, attention, and self-control in determining the behavior of addicts. Our approach suggests, however, that addiction is 'harmful' only when the addict fails to implement the optimal solution. We offer evidence for the special case of the opiates that harmful addiction is the manifestation of a mismatch between behavioral algorithms encoded in the human genome and the expanded menu of choices- -generated for example, by advances in drug delivery technology--faced by consumers in the modern world.
    Keywords: self-control, endogenous opioids, addiction, behavioral ecology, neuroeconomics, autism
    JEL: D1 D2 D3 D4
    Date: 2005–03–10
  15. By: Timothy J Halliday (Department of Economics, University of Hawaii at Manoa; John A Burns School of Medicine)
    Abstract: In this paper, we use longitudinal data on Self-Reported Health Status from the Panel Study of Income Dynamics to estimate a model of the evolution of health over the life-cycle. The model allows for two sources of persistence in health: unobserved heterogeneity, which models an individual’s (unobserved) ability to cope with health shocks, and state dependence, which models the extent to which the ability to cope with health shocks depends on health status. We allow for flexibility in both sources of persistence. Estimation indicates that heterogeneity is an important determinant of health suggesting that a person’s health today has important antecedents earlier on in life. We also find evidence of state dependence. However, its magnitude depends crucially on the individual’s age and unobserved heterogeneity. The relative contributions of heterogeneity and state dependence that we uncover have different implications for how health policy should be conducted.
    Keywords: health, dynamic panel data models, gradient
    JEL: I1 C5
    Date: 2005
  16. By: Timothy J Halliday (Department of Economics, University of Hawaii at Manoa)
    Abstract: This comment uses data from the PSID to investigate how selective migration affects the relationship between business cycles and health. We show that, among the healthy, migration is used to insure against macroeconomic fluctuations. However, among the unhealthy, there is no relationship between migration and business cycles. This suggests that recessions should induce an out-migration of disproportionately healthy people from economically depressed areas. This implies that - ceterus paribus - mortality and morbidity rates should be counter-cyclical.
    Date: 2005
  17. By: Ngee-Choon Chia (Department of Economics, National University of Singapore); Albert K C Tsui (Department of Economics, National University of Singapore)
    Abstract: While many studies have examined the cost-containment aspect of Medical savings accounts (MSA), few have investigated the adequacy of MSA to finance the health care expenditure. This paper estimates the present value of lifetime healthcare expenses (PVHE) of the Singaporean male and female elderly upon retirement at age 62. The estimation involves calibrating the stream of future healthcare expenditure; stochastic forecasting of cohort survival probabilities; and discounting the projected lifetime healthcare expenditure. Estimated values of the PVHE under various scenarios are used to assess the adequacy of the government-decreed minimum saving to be maintained in the MSA.
    Keywords: medical savings accounts, present value of lifetime health care expense, cohort survival probabilities
    JEL: G00 H51 I18 J11 J14

This nep-hea issue is ©2005 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.