nep-hea New Economics Papers
on Health Economics
Issue of 2006‒07‒21
seven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Reconsidering The Impact of Environment on Long-Run Growth When Pollution Influences Health and Agents Have Finite-Lifetime By Xavier Pautrel
  2. Capacity Management of Intensive Care Units in a multi-specialty Hospital in India By Vohra Seema; Dutta Goutam; Ghosh D.K.
  3. Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges By Andrew J. Oswald; Nattavudh Powdthavee
  4. Lee-Carter mortality forecasting: a multi-country comparison of variants and extensions By Heather Booth; Rob J Hyndman; Leonie Tickle; Piet de Jong
  5. Stochastic population forecasts using functional data models for mortality, fertility and migration By Rob J Hyndman; Heather Booth
  6. Pseudo-Generic Products and Mergers in Pharmaceutical Markets By Granier, L.; Trinquard, S.
  7. On the Cause of Increased Longevity and Urban Sprawl: A Macroeconomic Approach By Richard M.H. Suen

  1. By: Xavier Pautrel (Université de Nantes)
    Abstract: Using an overlapping generation model à la Blanchard (1985) with human capital accumulation, this article demonstrates that the influence of environment on optimal growth in the long-run may be explained by the detrimental effect of pollution on life expectancy. It also shows that, in such a case, greener preferences are growth- and welfare-improving even if the ability of the agents to learn is independent to pollution and utility is additively separable. Finally, it establishes that it is possible to implement a win-win environmental policy.
    Keywords: Growth, Environment, Overlapping Generations, Human Capital, Health
    JEL: E62 I21 O41 Q28
    Date: 2006–06
  2. By: Vohra Seema; Dutta Goutam; Ghosh D.K.
    Abstract: In this paper, we describe the capacity management of Intensive Care Units (ICUs) in a 300-bed multi-specialty hospital where the alternative ICU is utilized when the appropriate ICU is full for a set of two types of ICUs. Inter-arrival time and service time distributions in these ICUs have been tested and found to be exponentially distributed. While most capacity management models are deterministic in nature, we have developed a queuing model to provide a basis for decision-making in the design and management of these ICUs. The model results in around 19800 linear steady state equations, which are solved using the CPLEX linear optimization solver. Based on real data available from a hospital in India, the results demonstrate that the utilization of the ICU beds will improve up to 28 percent when admissions to the alternative ICU are permitted.
    Keywords: OR in health services, Queuing, Productivity and Competitiveness
    Date: 2006–07–12
  3. By: Andrew J. Oswald (University of Warwick and IZA Bonn); Nattavudh Powdthavee (University of London)
    Abstract: Economics ignores the possibility of hedonic adaptation (the idea that people bounce back from utility shocks). This paper argues that economists are wrong to do so. It provides longitudinal evidence that individuals who become disabled go on to exhibit recovery in mental wellbeing. Adaptation to severe disability, however, is shown to be incomplete. The paper suggests ways to calculate the level of compensatory damages for the pain and suffering from disablement. Courts all over the world currently use ad hoc methods.
    Keywords: disability, adaptation, happiness, legal compensation, wellbeing, GHQ scores
    JEL: D1 I3 I31 K0
    Date: 2006–07
  4. By: Heather Booth; Rob J Hyndman; Leonie Tickle; Piet de Jong
    Abstract: We compare the short- to medium-term accuracy of five variants or extensions of the Lee-Carter method for mortality forecasting. These include the original Lee-Carter, the Lee-Miller and Booth-Maindonald-Smith variants, and the more flexible Hyndman-Ullah and De Jong-Tickle extensions. These methods are compared by applying them to sex-specific populations of 10 developed countries using data for 1986-2000 for evaluation. All variants and extensions are more accurate than the original Lee-Carter method for forecasting log death rates, by up to 61%. However, accuracy in log death rates does not necessarily translate into accuracy in life expectancy. There are no significant differences among the five methods in forecast accuracy for life expectancy.
    Keywords: Functional data, Lee-Carter method, mortality forecasting, nonparametric smoothing, principal components, state space.
    JEL: J11 C53 C14 C32
    Date: 2006–05
  5. By: Rob J Hyndman; Heather Booth
    Abstract: Age-sex-specific population forecasts are derived through stochastic population renewal using forecasts of mortality, fertility and net migration. Functional data models with time series coefficients are used to model age-specific mortality and fertility rates. As detailed migration data are lacking, net migration by age and sex is estimated as the difference between historic annual population data and successive populations one year ahead derived from a projection using fertility and mortality data. This estimate, which includes error, is also modeled using a functional data model. The three models involve different strengths of the general Box-Cox transformation chosen to minimise out-of-sample forecast error. Uncertainty is estimated from the model, with an adjustment to ensure the one-step-forecast variances are equal to those obtained with historical data. The three models are then used in the Monte Carlo simulation of future fertility, mortality and net migration, which are combined using the cohort-component method to obtain age-specific forecasts of the population by sex. The distribution of forecasts provides probabilistic prediction intervals. The method is demonstrated by making 20-year forecasts using Australian data for the period 1921-2003.
    Keywords: Fertility forecasting, functional data, mortality forecasting, net migration, nonparametric smoothing, population forecasting, principal components, simulation.
    JEL: J11 C53 C14 C32
    Date: 2006–05
  6. By: Granier, L.; Trinquard, S.
    Abstract: This paper fills the gap in the theoretical literature concerning mergers between brand-name and generic laboratories in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name furms produce generics themselves, called pseudo-generics, enabling them to set up barriers to entry. We develop this topic by considering the pseudo-generics production as a mergers.catalyst. We show, in a duopoly model with substitutable goods, in which a brand-name firm and a generic firm compete à la Cournot, that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced.
    Keywords: Mergers, Pharmaceutical Market, Pseudo-Generics.
    JEL: I11 L12
    Date: 2006
  7. By: Richard M.H. Suen (University of Rochester)
    Abstract: This dissertation can be divided into two parts. The first part is motivated by two trends that occurred during the second half of the twentieth century. First, there was a persistent rising trend in medical spending. Second, there was a significant increase in longevity. Chapter 1 presents a model in which a combination of technological progress in medical treatment and rising incomes can explain these two. The main theme of this chapter is that the rapid growth in health care spending was not driven by factors associated with market structures or insurance opportunities, but by factors underlying the production and accumulation of health, namely improvements in medical treatment and rising incomes. According to this model, these two factors can explain all of the increase in health care spending and more than 60% of the increase in life expectancy at age 25 during the period 1950-2001. The next question considered is whether or not it is efficient to allocate so many resources to the health care sector. To answer this question, a benchmark for welfare analysis is constructed in Chapter 2. This is then compared to the model presented in Chapter 1. An equivalent variation measure is used to quantify the welfare differences between the two. One major finding of the second chapter is that, with improvements in medical treatment and rising incomes, a large increase in medical spending can be obtained even in the first-best scenario. The second part of this dissertation is motivated by two other phenomena that happened over the period 1910-1970. First, a rising fraction of the urban population chose to live far away from the city center. Second, there was a significant increase in car-ownership. he objective of Chapter 3 is to assess quantitatively the relationship between the two. To achieve this, a simple model is constructed in which people can choose where to live and whether or not to purchase a car. The calibrated version of the model is able to explain about 86% of car-ownership in 1970 and about 77% of the suburbanization trend during the period 1910-1970.
    Keywords: Technological Progress, Life Expectancy,Medical Spending, Automobiles, Suburbanization
    Date: 2006–07

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