nep-hea New Economics Papers
on Health Economics
Issue of 2007‒10‒27
eleven papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Does health affect portfolio choice? By Paul Smith; David Love
  2. Demonstration effects in preventive care By Ritesh Banerjee; Ethan Cohen-Cole; Giulio Zanella
  3. Health Expenditure and Income in the United States By Elisa Tosetti; Francesco Moscone
  4. Employer Health Insurance Mandates and the Risk of Unemployment By Katherine Baicker; Helen Levy
  5. Mosquitoes: The Long-term Effects of Malaria Eradication in India By David Cutler; Winnie Fung; Michael Kremer; Monica Singhal
  6. Sex Differences in Obesity Rates in Poor Countries: Evidence from South Africa By Anne Case; Alicia Menendez
  7. Household Search and Health Insurance Coverage By Matthew Dey; Christopher Flinn
  8. Maternal Employment and Overweight Children: Does Timing Matter? By Stephanie Von Hinke Kessler Scholder
  9. Expenditure Dispersion and Dietary Quality: Evidence from Canada By Timothy K.M. Beatty
  10. The Quantile Regression Approach to Efficiency Measurement: Insights from Monte Carlo Simulations By ChunpingLiu; Audrey Laporte; Brian Ferguson
  11. The Origins and the Evolution of Health Economics: a discipline by itself? Led by economists, practitioners or politics? By Luís Pina Rebelo

  1. By: Paul Smith; David Love
    Abstract: Previous studies find a strong and positive empirical connection between health status and the share of risky assets held in household portfolios. But is this relationship truly causal, in the sense that households respond to changes in health by altering their portfolio allocation, or does it simply reflect unobserved differences across households? We find that most of the variation by health is on the extensive margin of stock ownership (rather than the marginal allocation conditional on ownership), which more plausibly points to non-causal explanations. Moreover, we find that any link between health and risky assets depends crucially on the econometric treatment of unobserved heterogeneity. Once we account adequately for unobserved household differences, there is no longer a statistically significant relationship between any of our health measures and household portfolio decisions.
    Date: 2007
  2. By: Ritesh Banerjee; Ethan Cohen-Cole; Giulio Zanella
    Abstract: Using a unique dataset composed of female employees at a large medical organization, this paper explores the role of social interactions among female co-workers and neighbors in the decision to obtain breast cancer screening exams. In our theoretical framework, the experience of other women is salient because it alters the tolerance for ambiguity about their own vulnerability, via a comparative ignorance effect. We find that the social multiplier ranges from 2 to 3: the equilibrium effect of an exogenous shock that impacts the probability of performing a mammogram is two to three times the shock itself. We perform a number of checks: among other things, these reveal (in agreement with the model and our intuition) that such a social effect is stronger for women whose job (according to the O*NET dictionary of occupations) offers more opportunities for social interaction, and weaker for individuals directly involved in health care, such as doctors and nurses.
    Keywords: Medical care
    Date: 2007
  3. By: Elisa Tosetti; Francesco Moscone
    Abstract: This paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States followed over the period 1980-2004, we study the non-stationarity and cointegration between health spending and income, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross-section dependence and unobserved heterogeneity. Specifically, in our regression equations we assume that the error is the sum of a multifactor structure and a spatial autoregressive process, which capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we observe a significant spatial spill over, though with a smaller intensity than that detected in other studies on spatial concentration of US health spending. Our broad perspective of cross section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income.
    Keywords: Health expenditure; income elasticity; cross section dependence; panels
    JEL: C31 C33 H51
    Date: 2007–10
  4. By: Katherine Baicker; Helen Levy
    Abstract: Employer health insurance mandates form the basis of many health care reform proposals. Proponents make the case that they will increase insurance, while opponents raise the concern that low-wage workers will see offsetting reductions in their wages and that in the presence of minimum wage laws some of the lowest wage workers will become unemployed. We construct an estimate of the number of workers whose wages are so close to the minimum wage that they cannot be lowered to absorb the cost of health insurance, using detailed data on wages, health insurance, and demographics from the Current Population Survey. We find that 33 percent of uninsured workers earn within $3 of the minimum wage, putting them at risk of unemployment if their employers were required to offer insurance. Assuming an elasticity of employment with respect to minimum wage increase of -0.10, we estimate that 0.2 percent of all full-time workers and 1.4 percent of uninsured full-time workers would lose their jobs because of a health insurance mandate. Workers who would lose their jobs are disproportionately likely to be high school dropouts, minority, and female. This risk of unemployment should be a crucial component in the evaluation of both the effectiveness and distributional implications of these policies relative to alternatives such as tax credits, Medicaid expansions, and individual mandates, and their broader effects on the well-being of low-wage workers.
    JEL: I1 J01
    Date: 2007–10
  5. By: David Cutler; Winnie Fung; Michael Kremer; Monica Singhal
    Abstract: We examine the effects of malaria on educational attainment by exploiting geographic variation in malaria prevalence in India prior to a nationwide eradication program in the 1950s. Malaria eradication resulted in gains in literacy and primary school completion rates of approximately 12 percentage points. These estimates imply that the eradication of malaria can explain about half of the gains in these measures of educational attainment between the pre- and post-eradication periods in areas where malaria was prevalent. The effects are not present in urban areas, where malaria was not considered to be a problem in the pre-eradication period. The results cannot be explained by convergence across areas. We find gains for both men and women as well as for members of scheduled castes and tribes, a traditionally disadvantaged group.
    JEL: H51 I18 J24
    Date: 2007–10
  6. By: Anne Case; Alicia Menendez
    Abstract: Globally, men and women face markedly different risks of obesity. In all but of handful of (primarily Western European) countries, obesity is more prevalent among women than men. In this paper, we examine several potential explanations for this phenomenon. We analyze differences between men and women in reports and effects of the proximate causes of obesity -- physical exertion and food intake -- and the underlying causes of obesity -- childhood and adult poverty, depression, and attitudes about obesity. We evaluate the evidence for each explanation using data collected in an African township outside of Cape Town. Three factors explain the greater obesity rates we find among women. Women who were nutritionally deprived as children are significantly more likely to be obese as adults, while men who were deprived as children face no greater risk. In addition, women of higher adult socioeconomic status are significantly more likely to be obese, which is not true for men. These two factors can fully explain the difference in obesity rates we find in our sample. Finally (and more speculatively), women's perceptions of an 'ideal' female body are larger than men's perceptions of the 'ideal' male body, and individuals with larger 'ideal' body images are significantly more likely to be obese.
    JEL: D13 I10
    Date: 2007–10
  7. By: Matthew Dey; Christopher Flinn
    Abstract: Health insurance in the United States is typically acquired through an employer-sponsored program. Often an employee offerred employer-provided health insurance has the option to extend coverage to their spouse and dependents. We investigate the implications of the “publicness” of health insurance coverage for the labor market careers of spouses. The theoretical innovations in the paper are to extend the standard partial-partial equilibrium labor market search model to a multiple searcher setting with the inclusion of multi-attribute job offers, with some of the attributes treated as public goods within the household. The model is estimated using data from the Survey of Income and Program Participation (SIPP) using a Method of Simulated Moments (MSM) estimator. We demonstrate how previous estimates of the marginal willingness to pay (MWP) for health insurance based on cross-sectional linear regression estimators may be seriously biased due to the presence of dynamic selection effects and misspecification of the decision-making unit.
    Keywords: Household Search, Health Insurance Provision, Marginal Willingness to Pay
    JEL: D1 J33 J64
    Date: 2007
  8. By: Stephanie Von Hinke Kessler Scholder
    Abstract: Recent literature has shown consistent evidence of a positive relationship between maternal employment and children’s excess body weight. These studies have mainly focused on the effect of average weekly work hours over the child’s life on its overweight or obesity status. This paper attempts to explore whether the timing of maternal employment with respect to the child’s age is an important factor in this relationship. Data on a nationally representative British birth cohort are used to examine this; the 1958 National Child Development Study. The results show a significant positive correlation between maternal employment at age 7 of the child and the probability that a child is overweight at age 16. Additionally, the analysis shows it is full-time as opposed to part-time employment that increases the child’s weight. Subgroup analysis suggests this effect is driven by the lower socio-economic groups. Various econometric techniques are used to explore possible unobserved heterogeneity, but there is no evidence that the estimates are biased.
    Date: 2007–07
  9. By: Timothy K.M. Beatty
    Date: 2007–07
  10. By: ChunpingLiu; Audrey Laporte; Brian Ferguson
    Abstract: In the health economics literature there is an ongoing debate over approaches used to estimate the efficiency of health systems at various levels, from the level of the individual hospital- or nursing home –up to that of the health system as a whole. The two most widely used approaches to evaluating the efficiency with which various units deliver care are non-parametric Data Envelopment Analysis (DEA) and parametric Stochastic Frontier Analysis (SFA). Productivity researchers tend to have very strong preferences over which methodology to use for efficiency estimation. In this paper, we use generated experimental datasets and Monte Carlo simulation to compare the performance of DEA and SFA in terms of their ability to accurately estimate efficiency. We also evaluate Quantile regression as a potential alternative approach. A Cobb-Douglas production function, random error terms and a technical inefficiency term with different distributions are used to calculate the observed output. The results, based on these experiments, suggest that neither DEA nor SFA can be regarded as clearly dominant, and that Quantile regression because it yields more reliable estimates, represents a useful alternative approach in efficiency studies.
    Keywords: Technical efficiency, data envelopment analysis, stochastic frontier estimation, quantile regression.
    Date: 2007–07
  11. By: Luís Pina Rebelo (Universidade Católica Portuguesa (Porto))
    Abstract: Health has become a dominant economic and political issue over the past 40 years, with nations experiencing rapid rises in health care spending, and the health sector presenting high levels of expansion, rationalization and organization. I describe how by the end of World War II, both the intellectual and financial resources were being made available to answer the emerging empirically driven questions for a new applied branch of economic analysis: Health Economics. I also discuss the driving forces for the evolution of this new field, while identifying two distinct paths in health economic thought: the first rising from a territory previously ploughed, namely by Mushkin (1962), and later developed by Grossman (1972); the second of which stemming from Arrow’s 1963 paper ‘Uncertainty and the Welfare Economics of Medical Care’, a singularity amongst his mathematical economics pearls. Blaug remarked, in 1998, “health economics would seem to be a perfect topic for heterodox dissent and yet, surprisingly enough, radical economists and Marxists have not on the whole been attracted to health economics”. My view is this could have been because “mathematical economists” stepped forward and challenged themselves to solve problems such an unorthodox market posed.
    Keywords: Health Economics, Health Care Sector/ U.S. History, Social Welfare
    JEL: B20 I10 I11 I18 N32 N42
    Date: 2007–10

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