nep-hea New Economics Papers
on Health Economics
Issue of 2009‒03‒07
six papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The Health Penalty of China's Rapid Urbanization By E. Van de Poel; O. O'Donnell; E. Van Doorslaer
  2. Public Capital, Health Persistence and Poverty Traps By P R Agénor
  3. Valuing mortality and morbidity in the context of disaster risks By L. Cropper, Maureen; Sahin, Sebnem
  4. Do Doctors Induce Demand? By Beomsoo Kim
  5. Do Experience Make Better Doctors? By Juan M. Contreras; Beomsoo Kim; Ignez M. Tristao
  6. The new drug offset effect: some national and international evidence By Santerre, Rexford E

  1. By: E. Van de Poel (Erasmus School of Economics, Erasmus University Rotterdam); O. O'Donnell (University of Macedonia, Thessaloniki, Greece); E. Van Doorslaer (Erasmus School of Economics, Erasmus University Rotterdam)
    Abstract: Rapid urbanization could have positive and negative health effects, such that the net impact on population health is not obvious. It is, however, highly pertinent to the human welfare consequences of development. This paper uses community and individual level longitudinal data from the China Health and Nutrition Survey to estimate the net health impact of China’s unprecedented urbanization. We construct an index of urbanicity from a broad set of community characteristics and define urbanization in terms of movements across the distribution of this index. We use difference-in-differences estimators to identify the treatment effect of urbanization on the self-assessed health of individuals. The results reveal important, and robust, negative causal effects of urbanization on health. Urbanization increases the probability of reporting fair or poor health by 5 to 15 percentage points, with a greater degree of urbanization having larger health effects. While people in more urbanized areas are, on average, in better health than their rural counterparts, the process of urbanization is damaging to health. Our measure of self-assessed health is highly correlated with subsequent mortality and the causal harmful effect of urbanization on health is confirmed using more objective (but also more specific) health indicators, such as physical impairments, disease symptoms and hypertension.
    Keywords: urbanization; health; China; treatment effects; difference-in-differences
    JEL: I12 I18 O18
    Date: 2009–02–19
  2. By: P R Agénor
    Abstract: Growth dynamics and health outcomes are studied in a three period overlapping generations model with public capital. Reproductive agents face a non-zero probability of death in both childhood and adulthood. In addition to working, adults allocate time to their own health and child rearing. Health status in adulthood depends on health in childhood. With partial persistence in health, pure stagnation may occur. With full persistence, a stagnating equilibrium with low growth and high fertility may result from poor access to public capital. With threshold effects in health status, multiple growth regimes may emerge. A reallocation of public spending toward health or infrastructure may shift the economy from a low-growth equilibrium to a high-growth, low-fertility steady state.
    Date: 2009
  3. By: L. Cropper, Maureen; Sahin, Sebnem
    Abstract: Benefit-cost analyses of disaster risk reduction (DRR) projects are an important tool for evaluating the efficiency of such projects, and an important input into decision making. These analyses, however, often fail to monetize the benefits of reduced death and injury. The authors review the literature on valuing reduced death and injury, and suggest methods for calculating order-of-magnitude estimates of these benefits. Because few empirical estimates of the Value of a Statistical Life (VSL) are available for developing countries, methods for transferring estimates from high income to middle and low income countries are reviewed. The authors suggest using the range of values implied by an income elasticity of 1.0 and an elasticity of 1.5. With regard to injury valuation they discuss arguments for and against monetizing Quality Adjusted Life Years, and provide shortcuts to valuing injuries that may be used to assess their importance in DRR benefit-cost analyses.
    Keywords: Health Monitoring&Evaluation,Transport Economics Policy&Planning,Economic Theory&Research,Hazard Risk Management,Environmental Economics&Policies
    Date: 2009–02–01
  4. By: Beomsoo Kim (Department of Economics, Korea University, Seoul, South Korea)
    Abstract: There is a huge variation in medical utilization across geographic areas in the U.S. In addition, supply of medical care is positively correlated with demand. One commonly suspected possibility is physicians induce demand using their superior medical knowledge. This paper tests the supply induced demand in medicine using the exogenous negative income shock to Obstetrics/Gynecologists due to the declining number of births in their practice area. The number of births declined more than 8 % from 1989 to 1999 and physicians may decide to choose the cesarean section instead of normal delivery, as the cesarean section is reimbursed at a higher pay rate. Physicians might also provide more prenatal care than medically necessary in order to make up their own income under the fee for service reimbursement mechanism. Some evidence of induced demand in OB/GYNs practice pattern has been found. It has been found that the cesarean section would increase by 0.5 percentage points with a unit decline of birthrate per a population of 100, but prenatal care visits did not change.
    Keywords: supply induced demand, cesarean section, excessive prental care, fertility
    JEL: I12 I19 J13
    Date: 2009
  5. By: Juan M. Contreras (Congressional Budget Office); Beomsoo Kim (Department of Economics, Korea University, Seoul, South Korea); Ignez M. Tristao (Congressional Budget Office)
    Abstract: In this paper, we examine the ¡°learning-by-doing¡± hypothesis in medicine using a longitudinal census of laser in situ keratomileusis (LASIK) eye surgeries collected directly from patient charts. LASIK surgery has precise measures of presurgical condition and postsurgical outcomes. Unlike other types of surgery, the impact of unobservable underlying patient conditions on outcomes is minimal. Individual learning-bydoing is identified through observations of surgical outcomes over time based on the cumulative number of surgeries each surgeon has performed. Collective learning is identified separately through changes in a group adjustment rule determined jointly by all the surgeons through a structured internal review process. Our unique data set overcomes some of the measurement problems in patient outcomes encountered in other studies, and improves the possibility of identifying the impact of learning-by-doing separate from other effects. Our results do not support the hypothesis that the surgeon¡¯s individual learning improves outcomes, but we find strong evidence that experience accumulated by surgeons as a group in a clinic significantly improves outcomes.
    Keywords: learning, experience, LASIK
    JEL: I10 I12 I18
    Date: 2009
  6. By: Santerre, Rexford E
    Abstract: The new drug offset effect theory argues that new drugs pay for themselves by keeping people out of more expensive medical facilities. However, few studies have tested the new drug offset theory. This paper examines the impact of new drugs on aggregate medical care costs using data for the U.S. and some countries belonging to the Organization for Economic Cooperation and Development. The results from both tests imply a typical new drug slows the growth of overall medical care spending. Consequently, even health policy decision-makers with limited time horizons should consider the harmful effects of drug price controls.
    Keywords: new drug offset effect; health economics
    JEL: I11 I18
    Date: 2009–02–25

This nep-hea issue is ©2009 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.