nep-hea New Economics Papers
on Health Economics
Issue of 2008‒04‒29
seventeen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Taxing Sin Goods and Subsidizing Health Care By Cremer, Helmuth; De Donder, Philippe; Maldonado, Darío; Pestieau, Pierre
  2. On the Optimal Production Capacity for Influenza Vaccine By Forslid, Rikard; Herzing, Mathias
  3. Obesity and Development Functioning Among Children Aged 2-4 Years By John Cawley; C. Katharina Spieß
  4. Is obesity contagious?: social networks vs. environmental factors in the obesity epidemic By Ethan Cohen-Cole; Jason M. Fletcher
  5. Impact of Preventive Health Care on Indian Industry and Economy By Alka Chadha; Ali Mehdi; Garima Malik
  6. Selective Migration and Health By Halliday, Timothy; Kimmitt, Michael C.
  7. Heterogeneity, State Dependence and Health By Halliday, Timothy
  8. Civil Wars beyond their Borders: The Human Capital and Health Consequences of Hosting Refugees By Baez, Javier E.
  9. Optimal Sequencing of Antiretroviral Drug Cocktails under Uncertainty and Irreversibility By Mintewab Bezabih; Michael Stolpe
  10. The Social Costs of Health-related Early Retirement in Germany: Evidence from the German Socio-economic Panel By Gisela Hostenkamp; Michael Stolpe
  12. Delivering Cost-Efficient Public Services in Health Care, Education and Housing in Chile By D. Moccero
  13. Happiness and health: two paradoxes By Simone Borghesi; Alessandro Vercelli
  14. Beyond the business cycle - factors driving aggregate mortality rates By Katja Hanewald
  15. Forecasting Mortality Rate Using a Neural Network with Fuzzy Inference System By George Atsalakis; Dimitrios Nezis; George Matalliotakis; Camelia Ioana Ucenic; Christos Skiadas
  16. Private supplemental health insurance: retirees' demand By Carine Franc; Marc Perronnin; Aurelie Pierre
  17. Health and Civil War in Rural Burundi By Tom Bundervoet; Philip Verwimp; Richard Akresh

  1. By: Cremer, Helmuth; De Donder, Philippe; Maldonado, Darío; Pestieau, Pierre
    Abstract: We consider a two-period model. In the first period, individuals consume two goods: one is sinful and the other is not. The sin good brings pleasure but has a detrimental effect on second period health and individuals tend to underestimate this effect. In the second period, individuals can devote part of their saving to improve their health status and thus compensate for the damage caused by their sinful consumption. We consider two alternative specifications concerning this second period health care decision: either individuals acknowledge that they have made a mistake in the first period out of myopia or ignorance, or they persist in ignoring the detrimental effect of their sinful consumption. We study the optimal linear taxes on sin good consumption, saving and health care expenditures for a paternalistic social planner. We compare those taxes in the two specifications. We show under which circumstances the first best outcome can be decentralized and we study the second best taxes when saving is unobservable.
    Keywords: behavioral economics; dual vs single self; paternalism
    JEL: H21 I18
    Date: 2008–04
  2. By: Forslid, Rikard; Herzing, Mathias
    Abstract: This paper analyses the profit maximising capacity choice of a monopolistic vaccine producer facing the uncertain event of a pandemic in a homogenous population of forward-looking individuals. For any capacity level the monopolist solves the intertemporal price discrimination problem within the dynamic setting generated by the standard mathematical epidemiological model of infectious diseases. The monopolist thus bases its investment decision on the expected profits from the optimal price path given the infection dynamics. It is shown that the monopolist will always choose to invest in a lower production capacity than the social planner. Through numerical simulation it is demonstrated how the loss to society of having a monopoly producer decreases with the speed of infection transmission. Moreover, it is illustrated how the relationship between the monopolist's optimal vaccination rate and its time discount rate crucially depends on the cost of production capacity.
    Keywords: Vaccines
    JEL: D42 D62 H10 I18 L10
    Date: 2008–04
  3. By: John Cawley; C. Katharina Spieß
    Abstract: In developed countries, obesity tends to be associated with worse labor market outcomes. One possible reason is that obesity leads to less human capital formation early in life. This paper investigates the association between obesity and the developmental functioning of children at younger ages (2-4 years) than ever previously examined. Data from the German Socio-Economic Panel Study are used to estimate models of developmental functioning in four critical areas (verbal skills, activities of daily living, motor skills, and social skills) as a function of various measures of weight (including BMI and obesity status) controlling for various child and family characteristics. The findings indicate that, among boys, obesity is a significant risk factor for lagged development in verbal skills, social skills, and activities of daily living. Among girls, weight generally does not have a statistically significant association with these developmental outcomes. Further investigations show that the correlations exist even for those preschool children who spend no time in day care, which implies that the correlation between obesity and developmental functioning cannot be due to discrimination by teachers, classmates, or even day care providers.
    Keywords: Obesity, human capital, children, child development, Germany, gender
    JEL: I12 J24
    Date: 2008
  4. By: Ethan Cohen-Cole; Jason M. Fletcher
    Abstract: This note’s aim is to investigate the sensitivity of Christakis and Fowler’s claim (NEJM July 26, 2007) that obesity has spread through social networks. It is well known in the economics literature that failure to include contextual effects can lead to spurious inference on “social network effects.” We replicate the NEJM results using their specification and a complementary dataset. We find that point estimates of the “social network effect” are reduced and become statistically indistinguishable from zero once standard econometric techniques are implemented. We further note the presence of estimation bias resulting from use of an incorrectly specified dynamic model.
    Keywords: Obesity
    Date: 2008
  5. By: Alka Chadha (Indian Council for Research on International Economic Relations); Ali Mehdi (Indian Council for Research on International Economic Relations); Garima Malik (Indian Council for Research on International Economic Relations)
    Abstract: In this study, the authors have tried to examine the empirical evidence on the relationship between preventive health care and labour productivity and corporate profitability. While doing so, they try to generate awareness on the positive role of preventive health care in boosting the corporate sector's performance and improving the country's economy. Toward the end, based on their findings, they offer recommendations for policymakers and corporate management to promote preventive healthcare practice among employees. The primary research undertaken for this study included an electronic survey of some of the most well-established companies in the country, as well as a field-cum-electronic survey with a sample of employees in Delhi and the National Capital Region. Preventive health care holds enormous promise for the competitiveness of Indian companies, and for the country's economy in the global arena. In an era when the service sector is gaining pre-eminence, the value of the individual employee has increased more than ever before. Employees with specialized skills are the focal point on whose well-being and performance the productivity of a company rests. In a highly competitive corporate environment, companies cannot afford the absence of their employees due to sickness, caused by a sedentary lifestyle, etc., or a poor performance at the workplace due to poor health. Both as part of their corporate social responsibility and to boost their profits, a number of firms are offering preventive health care facilities to their employees. And it is on their performance, productivity and profitability that India's growth potential and global competitiveness depends substantially. Unfortunately, while the corporate sector has been quick to realize the benefits of preventive health care, policy has lagged behind and we do not yet have fiscal or other incentives that encourage prevention. While public spending on health has stagnated at 0.9 per cent of the GDP since the mid-1980s, and the government per capita health expenditure is one of the lowest in the world (US$7, as against US$2,548 in the United States), the government should focus its limited resources towards the health of the poor, and provide tax exemptions to sections which can take care of their own health needs.
    Keywords: preventive, executive, corporate health care, check-ups; employee wellness; lifestyle changes; health policy; fiscal incentives
    JEL: I11 I18
    Date: 2007–09
  6. By: Halliday, Timothy (University of Hawaii at Manoa); Kimmitt, Michael C. (University of Hawaii at Manoa)
    Abstract: Using data from the Panel Study of Income Dynamics, we investigate the impact of health on domestic migration within the United States. We find that, for men below 60 years of age, a move from the middle to the bottom of the health distribution reduces mobility by 32-40%. Non-random attrition from the panel implies that these are lower bounds. By contrast, we find evidence that, among older men, there is higher mobility at the top and bottom of the health distribution than there is in the middle. For women, we find no evidence of a relationship between their own health and mobility, although spousal health does affect the mobility of married women.
    Keywords: migration, health, selection, attrition
    JEL: J61
    Date: 2008–04
  7. By: Halliday, Timothy (University of Hawaii at Manoa)
    Abstract: We investigate the evolution of health over the life-cycle. We allow for two sources of persistence: unobserved heterogeneity and state dependence. Estimation indicates that there is a large degree of heterogeneity. For half the population, there are modest degrees of state dependence. For the other half of the population, the degree of state dependence is near unity. However, this may be the result of a high frequency of people in our data who never exit healthy states, potentially resulting in a failure to pin down the state dependence parameter for this segment of the population. We conclude that individual characteristics that trace back to early adulthood and before can have far reaching effects on health.
    Keywords: health, dynamic panel data models, gradient
    JEL: I1 C5
    Date: 2008–04
  8. By: Baez, Javier E. (Syracuse University)
    Abstract: Between 1993 and 1994, extremist militia groups carried out the extermination of ethnic Tutsis and moderate Hutus in the genocides of Burundi and Rwanda. Nearly one million people were killed and thousands were forcibly uprooted from their homes. Over the course of a few months, Kagera – a region in northwestern Tanzania – received more than 500,000 refugees from these wars. This region is home to a series of geographic natural barriers, which resulted in variation in refugee intensity. I exploit this variation to investigate the short and long run causal effects of hosting refugees on the outcomes of local children. Reduced-form estimates offer evidence of adverse impacts almost 1.5 years after the shock: a worsening of children’s anthropometrics of 0.3 standard deviations, an increase of 15 to 20 percentage points in the incidence of infectious diseases and an increase of roughly 7 percentage points in mortality for children under five. I also exploit intra- and inter-cohort variation and find that childhood exposure to this massive arrival of refugees reduced height in early adulthood by 1.8 cm (1.2%), schooling by 0.2 years (7.1%) and literacy by 7 percentage points (8.6%). Designs using the distance from the village to the border with Rwanda as an alternative instrumental strategy for refugee intensity support the findings. The estimates are robust across a variety of samples, specifications and estimation methods and provide evidence of a previously undocumented indirect effect of civil wars on the well-being of children and subsequent economic growth in refugee-hosting communities.
    Keywords: civil conflicts, refugees, children, human capital, health, Africa
    JEL: O10 O12 O15
    Date: 2008–04
  9. By: Mintewab Bezabih; Michael Stolpe
    Abstract: This paper develops a real options approach to the optimal sequencing of antiretroviral drug cocktails for HIV/AIDS patients in resource-poor settings. The analysis focuses on the implications of endogenous resistance mutations in the virus that reduce or eliminate the effectiveness of individual drugs within a cocktail when lack of laboratory equipment prevents these from being identified. Using a model with two drug cocktails, we show that the first-line therapy should be introduced later than in the case without resistance mutations and that the second-line therapy should be introduced earlier. We go on to discuss implications for comparative cost-effectiveness analyses.
    Keywords: HIV/AIDS, Real option theory, Cost-effectiveness analysis, Combination therapy, Developing countries
    JEL: D81 H51 I12
    Date: 2007–10
  10. By: Gisela Hostenkamp; Michael Stolpe
    Abstract: This study investigates the role of stratification of health and income in the social cost of health-related early retirement, as evidenced in the German Socio-economic Panel (GSOEP). We interpret early retirement as a mechanism to limit work-related declines in health that allows poorer and less healthy workers to maximize the total discounted value of annuities received from Germany’s pay-as-you-go pension system. Investments in new medical technology and better access to existing health services may help to curb the need for early retirement and thus improve efficiency, especially amid population ageing. To value the potential gains, we calibrate an intertemporal model based on ex post predictions from stratified duration regressions for individual retirement timing. We conclude that eliminating the correlation between income and health decline would delay the average age of retirement by approximately half a year, while keeping all workers in the highest of five categories of self assessed health would yield a further delay of up to three years. Had this scenario been realized during our 1992–2005 sample period, we estimate the social costs of early retirement would have been more than 20 percent lower, even without counting the direct social benefits from better health
    Keywords: Retirement timing, Health inequality, Social costs, Medical technology, Calibration
    JEL: H55 I12 O15
    Date: 2008–04
  11. By: David Mather (Department of Agricultural Economics, Michigan State University); Cynthia Donovan (Department of Agricultural Economics, Michigan State University)
    Abstract: Using a three-year panel of 4,058 Mozambican households surveyed in 2002 and 2005, we measure how PA adult mortality due to illness affects rural household size and number of adult members, crop and non-farm income, total household income, and asset levels. First difference estimations indicate that the effects of PA mortality vary considerably by the gender and household position of the deceased individual as well as by region. Results show that significant reductions in household size, income, and assets are more likely found in the event of a PA male death rather than a PA female death. In the North/Center of the country, a PA male head death can result in loss of 25% of crop income; in the South, such a death results in an average loss of 88% of non-farm income. In spite of these significant reductions in income, we do not find significant reductions in total income per AE among affected households, and they are not more likely to have ex post income/AE below the expenditurebased poverty line relative to non-affected households. However, due to significant asset losses and lower ex post landholding/AE relative to the non-affected population, affected households may be increasingly vulnerable to adverse income and assets shocks, especially those households that have suffered a PA male death.
    Keywords: food security, food policy, Mozambique, hiv, aids
    JEL: Q18
  12. By: D. Moccero
    Abstract: The Chilean authorities plan to raise budgetary allocations over the medium term for a variety of social programmes, including education, health care and housing. This incremental spending will need to be carried out in a cost-efficient manner to make sure that it yields commensurate improvements in social outcomes. Chile’s health indicators show that it fares relatively well in relation to comparator countries in the OECD area and in Latin America. But this is less so in the case of education, where secondary and tertiary educational attainment remain low, despite a significant increase over the years, and performance is poor on the basis of standardised test scores, such as PISA. Even though comparison with countries in the OECD area is difficult, a sizeable housing deficit has yet to be closed in Chile. To meet these various challenges, efforts will need to be stepped up to: i) narrow the disparities in performance that currently exist among schools with students from varying backgrounds through use of the “differentiated” voucher scheme and additional measures to improve the quality of teaching and management; ii) improve risk sharing among private and public health insurers, while increasing the coverage of health insurance to a broader variety of pathologies under AUGE; and iii) continue to tackle the shortage of housing, while enhancing the quality of subsidised housing units and their surrounding neighbourhoods for the poorest segments of society. This paper relates to the 2007 Economic Survey of Chile ( <P>Pour des services publics efficients dans le domaine des soins de santé, de l’éducation et du logement au Chili <BR>Les autorités prévoient d’augmenter les dotations budgétaires à moyen terme pour divers programmes sociaux touchant notamment aux secteurs de l’éducation, de la santé et du logement. Elles doivent faire preuve d’efficience dans l’utilisation de ce surcroît de dépenses, de façon à s’assurer que les résultats sociaux s’améliorent de manière proportionnelle. Les indicateurs de santé de la population montrent que la situation est relativement bonne au Chili par rapport aux pays pris comme comparaison dans la zone OCDE et en Amérique latine. Elle est moins favorable dans le secteur de l’éducation, où les résultats dans le secondaire et le supérieur restent faibles, malgré une progression sensible au fil des années, et où la performance telle que la mesurent les notes obtenues à des tests normalisés du type PISA est peu satisfaisante. Même s’il est difficile de faire des comparaisons avec les pays de l’OCDE, le Chili doit encore faire face à une importante pénurie de logements. Pour relever ces différents défis, il lui faudra redoubler d’effort afin de : i) réduire les disparités de résultats qui existent actuellement entre les établissements publics, privés subventionnés et totalement privés grâce à l’utilisation du dispositif de chèques-éducation « différenciés » ; ii) mieux partager les risques entre les assureurs publics et les assureurs privés, tout en élargissant la couverture de l’assurance maladie à des pathologies plus diverses ; et iii) continuer à faire face à la pénurie de logements tout en améliorant la qualité des logements subventionnés au profit des catégories les plus pauvres de la société. Ce document se rapporte à l’Étude économique du Chili 2007 (
    Keywords: health, santé, education, éducation, Chile, Chili, Public spending efficiency, data envelopment analysis, social housing, logement social
    JEL: C6 I1 I2
    Date: 2008–04–14
  13. By: Simone Borghesi; Alessandro Vercelli
    Abstract: This paper aims to establish systematic relationships between the two rapidly growing research streams on the socio-economic determinants of happiness and health. Although they have been pursued quite independently by different communities of researchers, empirical evidence points to very similar underlying causal mechanisms. In particular, in both cases per capita income plays a major role only up to a very low threshold, beyond which relative income and other relational factors become crucial for happiness and health. In addition, we argue that the so-called “paradox of happiness”, extensively discussed in the first research stream, has an empirical counterpart in the decoupling between self-reported happiness and health indexes: while life expectancy grew almost continuously in developed countries after World War II, self reported happiness did not increase and sometimes even decreased. On the basis of these structural analogies, we argue that a process of cross-fertilization between these two research streams would contribute to their development by clarifying the relationship between happiness, health and their determinants. Finally, we observe that the two literatures have converging policy implications: measures meant to reduce poverty and inequality and invest in social and environmental capital may improve both health and happiness of the individuals.
    Keywords: happiness, health, happiness paradox, poverty, inequality, relational goods.
    JEL: D6 I10 I18 I31 O15
    Date: 2007–12
  14. By: Katja Hanewald
    Abstract: This article provides a comprehensive econometric analysis of factors driving aggregate mortality rates over time. It differs from previous studies in this field by simultaneously considering an extensive set of macroeconomic, socio-economic and ecological factors as explanatory variables. Germany is chosen as an indicative example for other industrialized countries due to its advanced demographic transition process. Our regression analysis, which covers the time interval 1956-2004, indicates that sex- and age-specific mortality rates vary substantially in their response to external factors. Strongest associations are found with changes in real GDP, flu epidemics and the two life style variables alcohol and cigarette consumption in both univariate and multivariate setups. Further analysis shows that these effects are primarily contemporary, while other indicators such as weather conditions exert lagged effects. By combining variables in a multivariate model the share of explained data volatility can be substantially increased.
    Keywords: Aggregate mortality, business cycle, socio-economic factors, multivariate model
    JEL: I12 J11 C32
    Date: 2008–04
  15. By: George Atsalakis (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE); Dimitrios Nezis (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE); George Matalliotakis (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE); Camelia Ioana Ucenic (University of Crete - Technical University Cluj Napoca); Christos Skiadas (Data Analysis and Forecasting Laboratory, Technical University of Crete, GREECE)
    Abstract: Various methods have been developed to improve mortality forecasts. The authors proposed a neuro-fuzzy model to forecast the mortality. The forecasting of mortality is curried out by an ANFIS model which uses a first order Sugeno-type FIS. The model predicts the yearly mortality in a one step ahead prediction scheme. The method of trial and error was used in order to decide the type of membership function that describe better the model and provides the minimum error. The output of the models is the next year¢s mortality. The results were presented and compared based on three different kinds of errors: RMSE, MAE, and MAPE. The ANFIS model gives good results for the case of two gbell membership functions and 500 epochs. Finally, the ANFIS model gives better results than the AR and ARMA model.
    Keywords: ANFIS, Forecasting, Mortality, Modeling.
    Date: 2007
  16. By: Carine Franc (CERMES centre de recherche medecine, sciences, sante et societe); Marc Perronnin (IRDES institut for research and information in health economics); Aurelie Pierre (IRDES institut for research and information in health economics)
    Abstract: In France, private health insurance, that supplements public health insurance, is essential for access to health care. About 90% of the population is covered by a private contract and around half of them obtain their coverage through their employer. Considering the financial benefits associated with group contracts compared to individual contracts, we assume that the switching behaviors vary among different beneficiaries during the transition to retirement. Indeed, despite a 1989 law, the gap in premiums increases at retirement between group and individual contracts affords the opportunity to study the marginal price effect on switching behaviors. In this study, we consider the nature of the contract prior to retirement (compulsory or voluntary membership group contract and individual contract) as an indirect measure of the price effect. We focus on its role and check for a large number of individual characteristics that may influence the new retirees' health insurance demand.
    Keywords: private health insurance, retirement, switching behavior
    JEL: D12 G22 I19
    Date: 2008–04
  17. By: Tom Bundervoet (Vrije Universiteit Brussel (VUB), Belgium); Philip Verwimp (German Institute for Economic Research (DIW Berlin)); Richard Akresh (University of Illinois at Urbana-Champaign)
    Abstract: We combine household survey data with event data on the timing and location of armed conflicts to examine the impact of Burundi’s civil war on children’s health status. The identification strategy exploits exogenous variation in the war’s timing across provinces and the exposure of children’s birth cohorts to the fighting. After controlling for province of residence, birth cohort, individual and household characteristics, and province-specific time trends, we find an additional month of war exposure decreases children’s height for age z-scores by 0.047 standard deviations compared to non-exposed children. The effect is robust to specifications exploiting alternative sources of exogenous variation.
    Keywords: Child health, economic shocks, stunting, Africa, civil war
    JEL: I12 J13 O12
    Date: 2008

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