nep-hea New Economics Papers
on Health Economics
Issue of 2011‒10‒22
fourteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Valuing Prearranged Paired Kidney Exchanges: A Stochastic Game Approach By Murat Kurt; Mark S. Roberts; Andrew J. Schaefer; M. Utku Ünver
  2. Analysis of Health Care Utilization in Côte d'Ivoire By Alimatou Cisse
  3. HIV Testing and Risky Sexual Behavior By Erick Gong
  4. "Factors affecting hospital admission and recovery stay duration of in-patient motor victims in Spain" By Miguel Santolino; Catalina Bolancé; Manuela Alcañiz
  5. Income Inequality and Health: New Evidence from Panel Data By Dierk Herzer; Peter Nunnenkamp
  6. Economic Security in an Aging Canadian Population By Robert L. Brown
  7. The contextual effects of social capital on health: a cross-national instrumental variable analysis By Daniel Kim; Christopher F Baum; Michael Ganz; S.V. Subramanian; Ichiro Kawachi
  8. Exploring the dynamics of the efficiency in the Italian hospitality sector. A regional case study By JG. Brida; Manuela Deidda; N. Garrido; Manuela Pulina
  9. The effects of asymmetric and symmetric fetal growth restriction on human capital development By Robinson, Joshua J
  10. Welfare costs of reclassification risk in the health insurance market By Pashchenko, Svetlana; Porapakkarm, Ponpoje
  11. Examining health systems challenges and possible mitigation strategies in the face of an economic crisis in Swaziland By Mndzebele, Samuel
  12. Organizational Economics and Physician Practices By James B. Rebitzer; Mark E. Votruba
  13. The Effect of FDA Advisories on Branded Pharmaceutical Firms' Valuations and Promotion Efforts By Rena M. Conti; Haiden A. Huskamp; Ernst R. Berndt
  14. Tobacco Control in Tennessee: Stakeholder Analysis of the Development of the Non¬Smoker Protection Act, 2007 By Mamudu, Hadii M.; Dadkar, Sumati; Veeranki, Sreenivas P.; He, Yi

  1. By: Murat Kurt (University of Pittsburgh); Mark S. Roberts (University of Pittsburgh); Andrew J. Schaefer (University of Pittsburgh); M. Utku Ünver (Boston College)
    Abstract: End-stage renal disease (ESRD) is the ninth-leading cause of death in the U.S. Transplantation is the most viable renal replacement therapy for ESRD patients, but there is a severe disparity between the demand for kidneys for transplantation and the supply. This shortage is further complicated by incompatibilities in blood-type and antigen matching between patient-donor pairs. Paired kidney exchange (PKE), a cross-exchange of kidneys among incompatible patient-donor pairs, overcomes many difficulties in matching patients with incompatible donors. In a typical PKE, transplantation surgeries take place simultaneously so that no donor may renege after her intended recipient receives the kidney. Therefore, in a PKE, the occurrence of a transplantation requires compatibility among the pairs' willingnesses to exchange. We consider an arbitrary number of autonomous patients with probabilistically evolving health statuses in a prearranged PKE, and model their transplant timing decisions as a discrete-time non-zero-sum noncooperative stochastic game. We explore necessary and sufficient conditions for patients' decisions to be a stationary-perfect equilibrium, and formulate a mixed-integer linear programming representation of equilibrium constraints, which provides a characterization of the socially optimal stationary-perfect equilibria. We carefully calibrate our model using a large scale nationally representative clinical data, and empirically confirm that randomized strategies, which are less consistent with clinical practice and rationality of the patients, do not yield a significant social welfare gain over pure strategies. We also quantify the social welfare loss due to patient autonomy and demonstrate that maximizing the number of transplants may be undesirable. Our results highlight the importance of the timing of an exchange and the disease severity on matching patient-donor pairs.
    Keywords: medical decision making, paired kidney exchange, game theory, Markov decision processes, integer programming
    JEL: C78 I11
    Date: 2011–10–10
  2. By: Alimatou Cisse
    Abstract: Health constitutes a sufficiently solid entrance to reduce poverty and promote economic growth. Yet, in most African countries and particularly in Côte d’Ivoire, the populations’ state of health has seen a real deterioration over the last decade. This study seeks to explain this decline by determining the explanatory factors of recourse to health care providers. To this end, the multinomial logit model is used. The theoretical basis for this analysis is the maximization of a utility function to produce health. The data to test the study’s hypotheses came from the survey of the National Institute of Statistics, entitled Social Dimension of Structural Adjustment, carried out in April 1993. The results show that the education level of the household head, the household’s income, the price of medication, and the time to reach the health care provider (as a proxy for the distance to a health care provider) determine the choice for a specific health care provider. The level of education and the income positively influence this choice, while the cost of medication and the time to provider (time to reach the health provider) negatively influence the choice of health care provider.
    Date: 2011–10
  3. By: Erick Gong
    Abstract: Using data from a study that randomly assigns offers of HIV testing in two urban centers in East Africa, I examine the effects of testing, taking into account people's beliefs of their HIV status prior to testing. I objectively measure risky sexual behavior using sexually transmitted infections (ÒSTIsÓ) contracted during the 6 month study as proxies. Individuals surprised by an HIV-positive test are over nine times more likely to contract an STI indicating an increase in risky sexual behavior. Individuals surprised by an HIV-negative test are 84% less likely to contract an STI indicating a decrease in risky sexual behavior. Using these estimates, I simulate the effects of testing on new HIV infections. I find the overall number of HIV infections increases by 30% when people are tested compared to when they are unaware of their status - an unintended consequence of testing.
    Keywords: HIV/AIDS; risk behavior; information; beliefs
    JEL: D84 I18 O12
    Date: 2011–10
  4. By: Miguel Santolino (Faculty of Economics, University of Barcelona); Catalina Bolancé (Faculty of Economics, University of Barcelona); Manuela Alcañiz (Faculty of Economics, University of Barcelona)
    Abstract: Hospital expenses are a major cost driver of healthcare systems in Europe, with motor injuries being the leading mechanism of hospitalizations. This paper investigates the injury characteristics which explain the hospitalization of victims of traffic accidents that took place in Spain. Using a motor insurance database with 16,081 observations a generalized Tobit regression model is applied to analyse the factors that influence both the likelihood of being admitted to hospital after a motor collision and the length of hospital stay in the event of admission. The consistency of Tobit estimates relies on the normality of perturbation terms. Here a semi-parametric regression model was fitted to test the consistency of estimates, concluding that a normal distribution of errors cannot be rejected. Among other results, it was found that older men with fractures and injuries located in the head and lower torso are more likely to be hospitalized after the collision, and that they also have a longer expected length of hospital recovery stay.
    Keywords: Body injuries, Heckit estimator, semi-parametric estimator, Hausman test JEL classification:C24, I10
    Date: 2011–10
  5. By: Dierk Herzer; Peter Nunnenkamp
    Abstract: This paper argues that previous cross-country (panel) studies on the relationship between income inequality and health suffer from significant biases due to (i) omitted country-specific factors, (ii) endogeneity, and (iii) cross-country heterogeneity in the impact of inequality on health. Using panel cointegration techniques that are robust to omitted variables, endogenous regressors, and slope heterogeneity, we find that income inequality has, on average, a small, but robust and statistically significant positive impact on population health. Also, there is some evidence that inequality is endogenous in the sense that poor health leads to increased income inequality. Finally, we find that there are large cross-country differences in the effect of income inequality on health (in about 35 percent of the cases, the effect is negative
    Keywords: Health; Inequality; Panel cointegration
    JEL: C23
    Date: 2011–10
  6. By: Robert L. Brown
    Abstract: This paper has been written to bring up to date materials in a monograph that was a part of the Butterworths series of monographs in social gerontology, in particular, the 1991 monograph entitled: Economic Security in an Aging Population (Brown, 1991). The paper reports on research that indicates that today’s retirees are doing very well in terms of their replacement ratios and that Canadian poverty rates among the elderly are low relative to OECD (Organization for Economic Co-operation and Development) countries. Government-sponsored plans have been strengthened either through explicit expansion (e.g., the Guaranteed Income Supplement (GIS)) or through the reform of the Canada/Quebec Pension Plans (C/QPP). Also important is the maturation of Employer-sponsored pension plans. However, for the latter, coverage rates are down. This has created concern that future generations of Canadian retirees may not be able to experience the standard of living that is the reality for today’s elderly. The paper concludes that the aging of the population is not the cause of the increased cost of health care and social security today. Even by 2031, when the entire baby boom will be aged 65+, the impact of population aging on costs will be manageable. The paper also discusses the affordability of these systems if the normal age at retirement were to rise.
    Keywords: Baby boom, old age security, Canada/Quebec pension plans, registered pension plans, registered retirement savings plans, health care cost
    JEL: J18
    Date: 2011–07
  7. By: Daniel Kim (RAND Corporation); Christopher F Baum (Boston College; DIW Berlin); Michael Ganz (Outcomes Research, Abt Bio-Pharma Solutions, Inc.); S.V. Subramanian (Department of Society, Human Development, and Health, Harvard School of Public Health); Ichiro Kawachi (Department of Society, Human Development, and Health, Harvard School of Public Health)
    Abstract: Past observational studies of the associations of area-level/contextual social capital with health have revealed conflicting findings. However, interpreting this rapidly growing literature is difficult because estimates using conventional regression are prone to major sources of bias including residual confounding and reverse causation. Instrumental variable (IV) analysis can reduce such bias. Using data on up to 167,344 adults in 64 nations in the European and World Values Surveys and applying IV and ordinary least squares (OLS) regression, we estimated the contextual effects of country-level social trust on individual self-rated health. We further explored whether these associations varied by gender and individual levels of trust. Using OLS regression, we found higher average country-level trust to be associated with better self-rated health in both women (beta=0.051, 95% confidence interval 0.011 to 0.091, P=0.01) and men (beta=0.038, 0.0002 to 0.077, P=0.049). IV analysis yielded qualitatively similar results, although the estimates were more than double in size (in women, using country population density and corruption as instruments: beta=0.119, 0.028 to 0.209, P=0.005; in men: beta=0.115, 0.025 to 0.204, P=0.01). The estimated health effects of raising the percentage of a country's population that trusts others by 10 percentage points were at least as large as the estimated health effects of an individual developing trust in others. These findings were robust to alternative model specifications and instruments. Conventional regression and to a lesser extent IV analysis suggested that these associations are more salient in women and in women reporting social trust. In a large cross-national study, our findings, including those using instrumental variables, support the presence of beneficial effects of higher country-level trust on self-rated health. Past findings for contextual social capital using traditional regression may have underestimated the true associations. Given the close linkages between self-rated health and all-cause mortality, the public health gains from raising social capital within countries may be large.
    Keywords: social capital, social determinants of health, social environment, epidemiology, causal inference, instrumental variable
    JEL: I18
    Date: 2011–10–10
  8. By: JG. Brida; Manuela Deidda; N. Garrido; Manuela Pulina
    Abstract: This paper introduces a methodology to describe and compare the economic relative performance of the hospitality sector of the Italian regions during the period 2000-2004. Dynamics of the hospitality sector of each region is represented by the evolution of its economic efficiency. The investigation involves the following steps - a static Data Envelopment Analysis (DEA) to estimate the pure economic efficiency; two different notions of distances between time series and hierarchical clustering techniques are used to classify the economies in the sample. By using a correlation-based distance, three main clusters are detected, while two clusters are identified when the average distance is used. The trend patterns, identified by employing the correlation distance, can be interpreted in terms of exogenous factors that influence the economic efficiency of the group of regions, causing shocks picked up by the high volatility as well as structural breaks. By employing the average distance, one infers information on the cluster that have had similar efficiency values over the period under analysis. This efficiency can be also interpreted in terms of a particular type of hospitality management as well as the firm structure. Following the analysis, some policy and management implications are presented.
    Keywords: Regional hospitality sector; window DEA; hierarchical clustering
    JEL: L83 C24 C14
    Date: 2011
  9. By: Robinson, Joshua J
    Abstract: This paper explores the causal pathway by which poor fetal health translates into reducing educational attainment and earnings as an adult. Using insights from the medical literature, I decompose low birth weight infants into two distinct subtypes: a symmetric type, which is characterized by cognitive deficits, and an asymmetric type, which exhibits little to no cognitive problems. Using data from a longitudinal survey of newborns, I establish three results: First, there is empirical evidence of brain sparing in the asymmetric subtype, but not in the symmetric subtype. Second, despite differences in cognitive impairment, both subtypes exhibit similar impairment to physical health. And finally, there is evidence that the causes and timing of onset during pregnancy are different for asymmetric and symmetric growth restriction. The results indicate that differentiating between these subtypes may offer new opportunities to identify the underlying casual relationships between health and human capital development, as well as uncovering the "black box" mechanism behind the fetal origins hypothesis. These results also have broad implications for the timing of policy interventions aimed at pregnant women.
    Keywords: Health; Fetal Growth Restriction; Human Capital; Education
    JEL: I0 I12 I18 J24 I10
    Date: 2011–10–11
  10. By: Pashchenko, Svetlana; Porapakkarm, Ponpoje
    Abstract: One of the major problems of the U.S. health insurance market is that it leaves individuals exposed to reclassification risk. Reclassification risk arises because the health conditions of individuals evolve over time, while a typical health insurance contract only lasts for one year. A change in the health status can lead to a significant change in the health insurance premium. We study how costly this reclassification risk is for the welfare of consumers. More specifically, we use a general equilibrium model to quantify the implications of introducing guaranteed renewable contracts into the economy calibrated to replicate the key features of the health insurance system in the U.S. Guaranteed renewable contracts are private insurance contracts that can provide protection against reclassification risk even in the absence of consumer commitment or government intervention. We find that though guaranteed renewable contracts provide a good insurance against reclassification risk, the welfare effects from introducing this type of contracts are small. In other words, the presence of reclassification risk does not impose large welfare losses on consumers. This happens because some institutional features in the current U.S. system substitute for the missing explicit contracts that insure reclassification risk. In particular, a good protection against reclassification risk is provided through employer-sponsored health insurance and government means-tested transfers.
    Keywords: health insurance; reclassification risk; dynamic insurance; guaranteed renewable contracts; general equilibrium
    JEL: I11 G22 D91 D52 D58 D60
    Date: 2011–10–19
  11. By: Mndzebele, Samuel
    Abstract: Background: Evidence suggests that growth in a country’s Gross National Products does improve life expectancy only when substantial funds are directed towards healthcare and poverty eradication in society. The economic crisis currently faced by Swaziland has a potential of impacting negatively on her healthcare system, hence the need for drawing-up mitigation strategies. Purpose: To examine the healthcare system in the face of the economic crisis in Swaziland with the aim of drawing-up appropriate socio-economic mitigation strategies in response to the current challenges. Approach: The exercise engaged a descriptive approach through a three-level conceptual model that first examined the current health systems, leading to the analysis of possible health implications. The last phase involved drawing-up appropriate socio-economic mitigation strategies. Health challenges and implications: The Ministry of Health in Swaziland is already struggling to make significant strides in implementing key projects through her primary healthcare strategies as enshrined in the National Health policy of 2007. Of paramount importance is the impact on the comprehensive implementation of her annual action plan and the national health sector strategic plan (2008 -2013). Envisaged implications include the current threat on the capacity surrounding the management of HIVAIDS in the country. Conclusion (mitigation strategies): There is a strong need for the government of Swaziland and the Ministry of Health to act decisively in ensuring that health financing policies are reviewed and re-strategized to mitigate the economic impact on critical services within the department.
    Keywords: gross domestic product; healthcare resource allocation; health systems implications
    JEL: I10
    Date: 2011–09
  12. By: James B. Rebitzer; Mark E. Votruba
    Abstract: Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.
    JEL: D02 D23 I11 I12 J4 J44 M5
    Date: 2011–10
  13. By: Rena M. Conti; Haiden A. Huskamp; Ernst R. Berndt
    Abstract: The US Food and Drug Administration (FDA) expends considerable efforts in regulating medications approved for use. Yet the impact of medication labeling changes on brand pharmaceutical products, and whether and what firms do to respond to increased information regarding the safety and efficacy of a drug, have not be characterized. We propose a behavioral framework for examining the effects of FDA advisories on branded pharmaceutical firms and their products. We empirically assess the impact of recent FDA advisories on the stock market valuations of a sample of branded pharmaceutical manufacturing firms using event study methods. We examine whether and how branded pharmaceutical manufacturers respond to an advisory by assessing changes in promotion compared to non-affected firms. We find firms targeted by an advisory have average stock price declines of 3% in three days and 11% in five days following the advisory release, and in turn appear to decrease total physician-directed promotion spending, journals ads and detailing visits significantly six months following the advisory release; the provision of free samples is unaffected. We find no changes among therapeutic substitutes unaffected by the advisory. Results of sensitivity analyses suggest firms with market dominant positions experience similar decreases in stock market valuations and physician-directed promotion compared to pooled results. The results are also robust to alternative definitions of the timing of advisory release dates and the severity of advisories’ wording. Theory and empirical results suggest the public release of FDA advisories negatively impacts firm’s short-term market valuations. The results suggest an additional rationale for previously documented declines in prescribing after FDA advisory releases – significant declines in physician-directed promotion following FDA advisory releases; the combined (and likely correlated) effects of the release of the advisory and declines in physician-directed promotion on prescribing behavior are likely larger than the sum of the independent effects.
    JEL: D43 I11 I18 K23 L1 L11
    Date: 2011–10
  14. By: Mamudu, Hadii M.; Dadkar, Sumati; Veeranki, Sreenivas P.; He, Yi
    Abstract: In 2007, although Tennessee was (and still is) the third largest tobacco¬producing state, it enacted the Non¬Smoker Protection Act (NSPA), making most enclosed public and workplaces, and restaurants 100% smoke-free. This study triangulates archival documents with interviews, legislative debates and quantitative data for a stakeholder analysis of why and how the diverse interests in the state collaborated to develop the policy and identifies areas and opportunities for improvement. The study utilizes the policy cycle and stages of policy development approach and three public policy models – garbage can or multiple streams, policy networks, and socio¬economic influences – to give us understanding of the phases of the development of the NSPA – agenda-setting, legislative development, and implementation. While the dominant thesis for the origin of this smoke¬free policy (SFP) was government¬centered, the activities of non¬governmental actors, such as efforts by students of University of Tennessee in Knoxville to have smoke¬free domitories and that of Campaign for Healthy and Responsible Tennessee (CHART) to repeal preemption (nongovernmental¬centered thesis), and societal changes (bubble¬up thesis) contributed to its emergence. The SFP entered the state’s policy agenda when the problem of tobacco use in the state (health consequences and costs) and policy solutions (including SFP) became coupled with favorable political circumstances involving Governor Phil Bredesen’s unexpected announcement of support for a statewide SFP during smoke¬free state buildings bill signing ceremony in June 2006. This announcement created a window of opportunity for SFP change, which was seized by a change agent in the state, CHART. In February 2007, the Governor included SFP in the administration's legislative package for the 105th Legislative Session. Additionally, SFP bills were sponsored in both houses of the Legislature to make SFP a priority item on the state’s policy agenda. The development of the NSPA was facilitated by factors, such as the administration’s continuous support for the SFP, activities of CHART, public support for the SFP, U¬turn in the position of Tennessee Restaurant Association (now Tennessee Hospitality Association) to support 100% SFP and limited opposition from tobacco interests in the state. Although implementation of the NSPA has generally proceeded smoothly, about half of the stakeholders prefer that the exemptions are repealed, particularly those for age¬restricted venues, non¬enclosed areas of public places and private businesses with three or fewer employees. This study suggests that there is high level of knowledge on tobacco use (the problem) and control (policy solutions) in policy circles and the key remaining factors for policy change are favorable political environment and a change agent. The development of the NSPA suggests that proponents for policy change should know and understand their policy and political environment and be alert for any change that will facilitate the development of an SFP.
    Keywords: Tennessee, tobacco¬producing, smoke¬free policy, tobacco control, legislation, American Politics, Health Policy, Policy Design, Analysis, and Evaluation, Policy History, Theory, and Methods, Political Science, Public Health, Social Policy
    Date: 2011–10–01

This nep-hea issue is ©2011 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.