nep-hea New Economics Papers
on Health Economics
Issue of 2010‒01‒23
twelve papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Price Sensitivity of Demand for Prescription Drugs: Exploiting a Regression Kink Design By Marianne Simonsen; Lars Skipper; Niels Skipper
  2. Health Care Expenditure and Income in the OECD Reconsidered: Evidence from Panel Data By Badi H. Baltagi; Francesco Moscone
  3. Obesity and Happiness By Marina-Selini Katsaiti
  4. Evaluating Health Care Externality Costs Generated by Risky Consumption Goods By Michael A. Cohen; Marina-Selini Katsaiti
  5. Determinants of Health Disparities in Italian Regions By Luisa Franzini; Margherita Giannoni
  6. Years of Schooling, Human Capital and the Body Mass Index of European Females By Brunello, Giorgio; Fabbri, Daniele; Fort, Margherita
  7. Product differentiation and welfare in a mixed duopoly with regulated prices: the case of a public and a private hospital By Herr, Annika
  9. HEALTHY HUMAN DEVELOPMENT INDICES By Merwan Engineer; Nilanjana Roy; Sari Fink
  10. Inequality in health outcomes in India: the role of caste and religion By Borooah, Vani /K
  11. Top income shares and mortality: Evidence from advanced countries By Böckerman, Petri
  12. Environment related health costs in Flanders By Franckx , Laurent; Van Hyfte , Annick; Bogaert, Sarah; Vermoote, Stijn; Hunt , Alistair

  1. By: Marianne Simonsen (School of Economics and Management, University of Aarhus, Denmark); Lars Skipper (Aarhus School of Business, University of Aarhus, Denmark); Niels Skipper (School of Economics and Management, University of Aarhus, Denmark)
    Abstract: This paper investigates price sensitivity of demand for prescription drugs using drug purchase records for at 20% random sample of the Danish population. We identify price responsiveness by exploiting exogenous variation in prices caused by kinked reimbursement schemes and implement a regression kink design. Thus, within a unifying framework we uncover price sensitivity for different subpopulations and types of drugs. The results suggest low average price responsiveness with corresponding price elasticities ranging from -0.08 to -0.25, implying that demand is inelastic. Individuals with lower education and income are, however, more responsive to the price. Also, essential drugs that prevent deterioration in health and prolong life have lower associated average price sensitivity.
    Keywords: Prescription drugs, price, reimbursement schemes, regression kink design
    JEL: I11 I18
    Date: 2010–01–15
  2. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Francesco Moscone
    Abstract: This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period 1971-2004. In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.
    Keywords: Health expenditure, income elasticity, cross section dependence, heterogeneous panels, factor models
    JEL: C31 C33 H51
    Date: 2010–01
  3. By: Marina-Selini Katsaiti (University of Connecticut and University of Athens)
    Abstract: This paper provides insight on the relationship between obesity and happiness. Using the latest available cross sectional data from Germany (GSOEP 2006), UK (BHPS 2005), and Australia (HILDA 2007). We examine whether there is evidence on the impact of overweight on subjective well being. The Hausman test is employed in the univariate and multivariate specifications chosen and reveals evidence for the presence of endogeneity in the German and the Australian data. Instrumental variable analysis is performed under the presence of endogeneity whereas for the UK we run OLS regressions. Results indicate that in all three countries obesity has a negative and significant effect on the subjective well being of individuals. For Germany, using a differences-in-differences methodology, I find that non-overweight/non-obese individuals are on average 0.5 units happier than their overweight/obese counterparts. My findings also have important implications for the effect of other socio-demographic, economic and individual characteristics on well being.
    Keywords: Happiness, Obesity, Instrumental Variable Analysis, Subjective Well Being
    JEL: D60 I31
    Date: 2009–10
  4. By: Michael A. Cohen (University of Connecticut); Marina-Selini Katsaiti (University of Connecticut and University of Athens)
    Abstract: We present an overlapping-generations (OLG) macroeconomic model that applies a behavioral interpretation of preferences for goods that generate health risks. In this paper proneness to poor health is viewed as a cognitive miscalculation by economic agents between their expected health state over various consumption bundles and the actual health care they require for their health outcome. To model this the paper borrows insight from prospect theory and applies the reference-dependent preference framework to the specication of out utility model. In our model of the economy individual preferences are decomposed into intrinsic consumption utility and gain-loss utility associated with the miscalculation. Agents in the economy are stratied in their health states as well as their expected health care consumption according to some probability measure over the population. Heterogeneity introduced in this way generates consumers of varied proneness to risk associated with consumption of unhealthy goods because individuals have various marginal valuations of their miscalculation. In such a population, when all agents pay the same insurance premium, health-conscious agents shoulder the health care costs of their less health-conscious counterparts and the less health-conscious are engaged in less healthy consumption than they would if they paid actuarially fair premia. We demonstrate these eects in simulations by comparing the risk pooling equilibria to the actuarially fair pricing equilibria. This paper introduces the mathematical programming equilibrium constraint (MPEC) computational approach to compute model equilibria; we believe this approach is new to heterogeneous agent OLG model simulation.
    Keywords: Risky Consumption, Health care Cost, Insurance Premia Pricing, Two Sector Model, Obesity.
    JEL: I19 E21 O41
    Date: 2009–12
  5. By: Luisa Franzini; Margherita Giannoni
    Abstract: There is an extensive literature on regional disparities in health, but much of thisliterature focuses on the United States. Among European countries, Italy is the country whereregional health disparities contribute the most to socioeconomic health disparities. In this paper,we report on regional differences in self-reported poor health and explore possible determinantsat the individual and regional levels in Italy. We use data from the “Indagine Multiscopo sulle Famiglie”, a survey of aspects ofeveryday life in the Italian population, to estimate multilevel logistic regressions that model poorself-reported health as a function of individual and regional socioeconomic factors. Next we usethe causal step approach to test if living conditions, healthcare characteristics, social isolation,2and health behaviors at the regional level mediate the relationship between regionalsocioeconomic factors and self-rated health. We find that residents living in regions with more poverty, more unemployment, andmore income inequality are more likely to report poor health and that poor living conditions andprivate share of healthcare expenditures at the regional level are determinants of socioeconomicdisparities in self-rated health among Italian regions. The implications are that regional contexts matter and that regional policies in Italyhave the potential to reduce health disparities by implementing interventions aimed at improvingliving conditions and access to quality healthcare.
    Keywords: health inequality, Italy, self-reported health, regional health disparities
    JEL: I10 I12 D10
    Date: 2009–10–20
  6. By: Brunello, Giorgio (University of Padova); Fabbri, Daniele (University of Bologna); Fort, Margherita (University of Bologna)
    Abstract: We use the compulsory school reforms implemented in European countries after the II World War to investigate the causal effect of education on the Body Mass Index (BMI) and the incidence of overweight and obesity among European females. Our IV estimates suggest that years of schooling have a protective effect on BMI. The size of the estimated effect is not negligible but smaller than the one found in comparable recent work for the US. We depart from the current empirical literature in three main directions. First, we use a multi-country approach. Second, we complement the standard analysis of the causal impact of years of schooling on BMI with one relying on a broader measure of education, i.e. individual standardized cognitive tests, and show that the current focus in the literature on years of schooling as the measure of education is not misplaced. Last, we evaluate whether the current focus on conditional mean effects should be integrated with an approach which allows for heterogeneous responses to changes in compulsory education. Although our evidence based on quantile regressions is mixed, there is some indication that the protective effect of schooling does not increase monotonically from the lower to the upper quantile of the distribution of BMI. Rather, the marginal effect is stronger among overweight (but not obese) females than among females with BMI above 30.
    Keywords: obesity, human capital, Europe
    JEL: I12 I21
    Date: 2009–12
  7. By: Herr, Annika
    Abstract: Hospital markets are often characterised by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of different objectives of the hospitals on quality, profits, and overall welfare in a price regulated duopoly with symmetric locations. In contrast to other studies on mixed oligopolies, this paper shows that in a duopoly with regulated prices privatisation of the public hospital may increase overall welfare depending on the difference of the hospitals' marginal costs and the weight of the additional public hospital's motive. --
    Keywords: mixed oligopoly,price regulation,quality,hospital competition
    JEL: L13 I18 H42
    Date: 2009
  8. By: Belot, Michèle; James, Jonathan
    Abstract: This paper provides field evidence on the effects of diet on educational outcomes, exploiting a campaign lead in the UK in 2004, which introduced drastic changes in the meals, offered in the schools of one Borough â Greenwich - shifting from low-budget processed meals towards healthier options. We evaluate the effect of the campaign on educational outcomes in primary schools using a difference in differences approach; comparing educational outcomes in primary schools (key stage 2 outcomes more specifically) before and after the reform, using the neighbouring Local Education Authorities as a control group. We find evidence that educational outcomes did improve significantly in English and Science. We also find that the campaign lead to a 15% fall in authorised absences â which are most likely linked to illness and health.
    Keywords: Child nutrition, Child health, School meals, Education, Natural Experiment, Placebo effect, Food Consumption/Nutrition/Food Safety, Health Economics and Policy, J13, I18, I28, H51, H52,
    Date: 2009–12
  9. By: Merwan Engineer (Department of Economics, University of Victoria); Nilanjana Roy (Department of Economics, University of Victoria); Sari Fink
    Abstract: In the Human Development Index (HDI), life expectancy is the only indicator used in modeling the dimension ‘a long and healthy life’. Whereas life expectancy is a direct measure of quantity of life, it is only an indirect measure of healthy years lived. In this paper we attempt to remedy this omission by introducing into the HDI the morbidity indicator, “expected lost healthy years” (LHE), used in the World Health Report Though LHE is only weakly correlated with life expectancy and displays considerable variation across countries, the ranking of nations using the adjusted HDI is very similar to that from the HDI. Nevertheless, there are some outlier countries (including large countries like China and the United States) that experience notable changes in rank. Given the considerable variation in the morbidity data across gender, we also adjust the Gender-related Development Index (GDI) in a similar fashion. The ranking using the adjusted GDI is very similar to that from the GDI, but it has a lower rank correlation with the HDI.
    Keywords: Human Development Index, Healthy Life Expectancy, Morbidity, Gender-related Development Index
    JEL: I00 I1 O5
    Date: 2010–01–08
  10. By: Borooah, Vani /K
    Abstract: The “social gradient to health” - whereby people belonging to groups higher up the social ladder had better health outcomes than those belonging to groups further down - is essentially a Western construct; there has been very little investigation into whether, in developing countries also, people’s state of health is dependent on their social status. The purpose of this paper is to evaluate the relative strengths of economic and social status in determining the health status of persons in India. In other words, even after controlling for non-community factors, did the fact that Indians belonged to different social groups, encapsulating different degrees of social status, exercise a significant influence on the state of their health? The existence of a social group effect would suggest that there was a “social gradient” to health outcomes in India. Furthermore, there was the possibility that the “social gradient” existed with respect to some outcomes but not to others. In investigating this, the paper addresses, in the Indian context, an issue which les at the heart of social epidemiology: estimating the relative strengths of individual and social factors in determining health outcomes.
    Keywords: Health outcomes; Caste; Religion; India
    JEL: I12
    Date: 2010
  11. By: Böckerman, Petri
    Abstract: The paper examines the effect of top income shares on the crude death and infant mortality rates. We use balanced panel data that covers nine advanced countries over the period 1952-1998. Top income shares are measured as the shares of pre-tax income going to the richest 0.1%, 1% and 10% of the population. We also estimate separate effects on both female and male mortality rates. The most important finding is that there is no overall relationship between top income shares and mortality. If anything, the estimates based on gender breakdown show that there is evidence that an increase in income inequality is associated with a decrease in the crude death rate for males.
    Keywords: income inequality; top income shares; mortality
    JEL: I12 N30
    Date: 2010–01–12
  12. By: Franckx , Laurent; Van Hyfte , Annick; Bogaert, Sarah; Vermoote, Stijn; Hunt , Alistair
    Abstract: In 2007-2008, ARCADIS has conducted a study on behalf of the Flemish government, with as main objectives a review and a critical analysis of the existing calculations of environmental health costs in Flanders. This study covers the effects on human health of air pollution due to particulates and tropospheric ozone. Despite the large uncertainty surrounding individual estimates, we can be confident about the order of magnitude of the yearly marginal “cost of illness” due to PM2.5, PM10 and ozone (a few dozens of millions EUR per 10µg/m³). If we also take into account the “subjective” health costs, our estimates run in the billion EUR.
    Keywords: air quality; health; cost-of-illness; PM2.5; PM10; ozone
    JEL: H51 I12 Q53 Q51
    Date: 2009–12–12

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