nep-hea New Economics Papers
on Health Economics
Issue of 2011‒12‒19
nine papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. The Mental Health Cost of Corruption: Evidence from Sub-Saharan Africa By Robert Gillanders
  2. Alcohol Myopia and Risk Taking By Alejandro T. Moreno-Okuno; Emiko Masaki
  3. Welfare costs of reclassification risk in the health insurance market By Pashchenko, Svetlana; Porapakkarm, Ponpoje
  4. The role of marriage in the causal pathway from economic conditions early in life to mortality By van den Berg, Gerard J.; Gupta, Sumedha
  5. Determinants of Public Health expenditures in Pakistan By Abbas, Faisal; Hiemenz, Ulrich
  6. Does Contracting-Out Primary Care Services Work? The Case of Rural Guatemala By Julian Cristia; William Evans; Beomsoo Kim
  8. Regression Discontinuity Designs with an Endogenous Forcing Variable and an Application to Contracting in Health Care By Patrick Bajari; Han Hong; Minjung Park; Robert Town
  9. Modelling the Age Dynamics of Chronic Health Conditions: Life-Table-Consistent Transition Probabilities and Their Application By Frank T. Denton; Byron G. Spencer

  1. By: Robert Gillanders (University College Dublin)
    Abstract: This paper examines the effect that experiencing corruption has on an individual’s mental health using microeconomic data from the Afrobarometer surveys. The results show a statistically significant and economically meaningful effect in both binary and ordered probit models using both an experience of corruption index and a simple binary variable. Having to pay a bribe to obtain documents and permits, to avoid problems with the police or to access medical care emerge as the arenas in which corruption can have a damaging effect on mental health. Some evidence is presented that an individual needs to experience such corruption more than ‘once or twice’ for this effect to become evident.
    Keywords: Mental Health; Corruption; Well-Being; Sub-Saharan Africa
    Date: 2011–11–28
  2. By: Alejandro T. Moreno-Okuno (Department of Economics and Finance, Universidad de Guanajuato); Emiko Masaki (Asian Development Bank)
    Abstract: The aim of this paper is to develop a model that explains how the consumption of some additive substances a¤ects an individual?s choice between risky alternatives. We do this by assuming that some additives substances, speci?cally alcohol, increase individual?s present bias. As individuals that consume alcohol show greater preference for the present and less for the future, they would ?nd risky choices with rewards in the present and costs in the future more attractive. Theferore, an individual that wouldn´t have accepted a lottery may do so after consuming alcohol and he regret his decision after the alcohol in his blood is eliminated. We analyze the e¤ect of two taxes in discouraging a risky activity: a tax on the consumption of alcohol and a tax (or penalty) if the future costs of the lottery are realized.
    Keywords: habit-formation, risk taking, alcohol consumption
    JEL: D11 D60 D81 D91
    Date: 2011–10
  3. By: Pashchenko, Svetlana (Uppsala Center for Fiscal Studies); Porapakkarm, Ponpoje (University of Macau)
    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: D52 D58 D91 G22 I11
    Date: 2011–12–12
  4. By: van den Berg, Gerard J. (IFAU - Institute for Labour Market Policy Evaluation); Gupta, Sumedha (Indiana University-Purdue University Indianapolis)
    Abstract: This paper analyzes the interplay between early-life conditions and marital status, as determinants of adult mortality. We use individual data from Dutch registers (years 1815-2000), combined with business cycle conditions in childhood as indicators of earlylife conditions. The empirical analysis estimates bivariate duration models of marriage and mortality, allowing for unobserved heterogeneity and causal effects. Results show that conditions around birth and school ages are important for marriage and mortality. Men typically enjoy a protective effect of marriage on mortality, whereas women suffer during childbearing ages. Having been born under favorable economic conditions reduces female mortality during childbearing ages.
    Keywords: Death; longevity; recession; life expectancy; lifetimes; marital status; timing of events; selectivity; health
    JEL: C41 E32 I12 J14 N13 N33
    Date: 2011–11–30
  5. By: Abbas, Faisal; Hiemenz, Ulrich
    Abstract: This study describes the macroeconomic determinants of health care spending in a broad context using time series data from Pakistan on economic, demographic, social, and political variables. The data spans a period from 1972- 2006 and was analyzed using cointegration and error correction approaches. All variables were found to be first difference stationary and the results confirm the presence of one cointegrating vector. This proves the existence of a long-run relationship between public health care expenditures and the other variables used in the model. The income elasticity of public health care expenditures is estimated at 0.23. As this value is less than unity it suggests that, contrary to most of the Organization for Economic Co-operation and Development (OECD) countries health care qualifies as a necessity in Pakistan. Urbanization and unemployment are variables that have a negative effect on health care expenditures, with elasticity values of -1.29 and â0.32 respectively, implying that it is costly to provide health care to residents of remote rural areas of Pakistan.
    Keywords: Public Health Expenditures, Unemployment, Urbanization, Cointegration, time series, Pakistan, Health Economics and Policy,
    Date: 2011–11
  6. By: Julian Cristia; William Evans; Beomsoo Kim
    Abstract: This paper estimates the impact of a large-scale contracting-out program in Guatemala, using two waves of living standard measurement surveys which collected data before and after the expansion of the program and exploiting variation in the timing of the program to estimate treatment effects. Results indicate large program impacts on immunization rates for children and prenatal care provider choices. The program increases substantially the role of physician and nurses as prenatal care providers at the expense of traditional midwives. There is no evidence of effects in family planning outcomes. Taken together these results suggest a potential effective role of contracting-out in the provision of health care.
    JEL: I12 I18
    Date: 2011–11
  7. By: Jose Luis Pinto Prades (Department of Economics, Universidad Pablo de Olavide); Eva Rodriguez Miguez (Department of Economics, Universidad de Vigo)
    Abstract: The Lead Time Trade-Off (L-TTO) is a variant of the TTO method that tries to overcome some of the problems of the most widely used method (Torrance, 1986) for health states worse than death (SWD). Theoretically, the new method reduces the problems that have been detected when researchers have elicited preferences for SWD. However, several questions remain to be clarified. One of them is the influence of this new method for states better than death (SBD). In this paper we try to shed some light on this issue using a split sample design (n=500). One subsample (n=188) was interviewed using L-TTO and the rest using the traditional TTO (T-TTO). Our results show that the L-TTO produces utilities that are consistently higher than the T-TTO for SBD. Furthermore, the higher the severity the higher the difference between both methods. Another finding is that the L-TTO seems to produce a lower number of SWD. This effect seems to be concentrated in the most severe health states. This implies a violation of additive separability, one of the cornerstones of the QALY model. Our data show that the L-TTO may be different from the T-TTO in more respects than those that were originally intended.
    Keywords: Lead Time Trade-Off, QALYs, Discounting, Additive Independece
    JEL: I10 D01
    Date: 2011–12
  8. By: Patrick Bajari; Han Hong; Minjung Park; Robert Town
    Abstract: Regression discontinuity designs (RDDs) are a popular method to estimate treatment effects. However, RDDs may fail to yield consistent estimates if the forcing variable can be manipulated by the agent. In this paper, we examine one interesting set of economic models with such a feature. Specifically, we examine the case where there is a structural relationship between the forcing variable and the outcome variable because they are determined simultaneously. We propose a modi…ed RDD estimator for such models and derive the conditions under which it is consistent. As an application of our method, we study contracts between a large managed care organization and leading hospitals for the provision of organ and tissue transplants. Exploiting "donut holes" in the reimbursement contracts we estimate how the total claims filed by the hospitals depend on the generosity of the reimbursement structure. Our results show that hospitals submit significantly larger bills when the reimbursement rate is higher, indicating informational asymmetries between the payer and hospitals in this market.
    JEL: D82 I10 L14
    Date: 2011–12
  9. By: Frank T. Denton; Byron G. Spencer
    Abstract: We derive transition probability matrices for chronic health conditions using survey prevalence data. Matrices are constructed for successive age groups and the sequence represents the “age dynamics” of the health conditions for a stationary population – the probabilities of acquiring the conditions, of moving from one chronic conditions state to another, and of dying. One can simulate the life path of a cohort under the initial probabilities, and again under altered probabilities to explore the effects of eliminating a particular condition or reducing its mortality probabilities. We report the results of such simulations and note the general applicability of the methods.
    Keywords: Chronic health conditions, transition probabilities, age dynamics
    JEL: I19 J19
    Date: 2011–11

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