nep-hea New Economics Papers
on Health Economics
Issue of 2012‒05‒08
fifteen papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Supported accommodation options for people with disability: Investigating responses to the urban village concept By Laurie Brown; Binod Nepal; Sarah Yu
  2. Rethinking Health Sector Wide Approaches through the lens of Aid Effectiveness By Andrew McNee
  3. Determinants of Pharmaceutical Innovation: The Role of Technological Opportunities Revisited By Bastian Rake
  4. The Impact of Early Life Economic Conditions on Cause-Specific Mortality During Adulthood By Yeung, Gary Y.C.; van den Berg, Gerard J.; Lindeboom, Maarten; Portrait, France
  5. Is Recipiency of Disability Pension Hereditary? By Bratberg, Espen; Nilsen, Øivind Anti; Vaage, Kjell
  6. The International Migration of Health Professionals By Grignon, Michel; Owusu, Yaw; Sweetman, Arthur
  7. Expert Elicitation of the Value per Statistical Life in an Air Pollution Context By Hammitt, James; Roman, Henry; Stieb, David; Walsh, Tyra
  8. The Social Value of Mortality Risk Reduction: VSL vs. the Social Welfare Function Approach By Adler, Matthew; Hammitt, James; Treich, Nicolas
  9. The Impact of HIV/AIDS on Foreign Direct Investment: Evidence from Sub-Saharan Africa By Elizabeth Asiedu; Yi Jin; Isaac Kalonda-Kanyama
  10. Effect of response times on survival from out-of-hospital cardiac arrest: using geographic information systems By Sund, Björn
  11. Optimal Social Insurance with Endogenous Health By Laun, Tobias
  12. Does breastfeeding support at work help mothers and employers at the same time? By Emilia Del Bono; Chiara Daniela Pronzato
  13. Financial Consequences of Ill Health and Informal Coping Mechanisms in Indonesia By Robert Sparrow; Ellen Van de Poel; Gracia Hadiwidjaja; Athia Yumna; Nila Warda; Asep Suryahadi
  14. The Impact of Patient Cost-Sharing on the Poor: Evidence from Massachusetts By Amitabh Chandra; Jonathan Gruber; Robin McKnight
  15. The Impact of Health Information Technology on Hospital Productivity By Jinhyung Lee; Jeffery S. McCullough; Robert J. Town

  1. By: Laurie Brown (NATSEM, University of Canberra); Binod Nepal (NATSEM, University of Canberra); Sarah Yu (NATSEM, University of Canberra)
    Abstract: ACT Community Living Project Inc (CLP) is a not-for-profit organisation seeking quality life choices for people with disability, including a choice of accommodation that suits their individual needs as well as social inclusion opportunities within the wider community. CLP conducted a survey in 2010-11 in the ACT designed at gathering detailed information on the areas of care and supervision levels for the person with disability, availability of respite and other disability services, future planning and financial support levels for the person with disability once they are no longer able to be supported in the family home. The aim of the survey was to obtain data from impacted families to develop an evidence-based supported accommodation model that meets the needs of care recipients, their families and carers.
    Keywords: Indigenous, lifetime income, disadvantage, Australia
    Date: 2012–01
  2. By: Andrew McNee (Development Policy Centre, Crawford School of Public Policy, The Australian National University)
    Abstract: Sector Wide Approaches (SWAps) are an approach to aid management that aim to support recipient government leadership. Health aid has grown rapidly in the past 20 years and in this time SWAps have become an important health aid delivery approach. However, the empirical evidence is that the performance of health SWAps is, at best, mixed. Outcome and impact benefits of health SWAps are inconclusive, and overall process level performance is poor. The key insight offered by this paper is that a divergence has developed between the underlying theory of change of health SWAps, and their implementation. The paper argues the theory of change underlying SWAps is highly consistent with effective aid, however the practice is not. Health SWAps have been characterised by cumbersome architecture that is partially implemented and used, and which does not facilitate government ownership and commitment to indigenous institutional development. A core stream of the analysis as to why this is the case relates to technical shortcomings within the SWAp architecture itself, however this is not sufficient to understand the reasons for the limited success of SWAps. Rather it is clear there are a range of broader incentives and understandings within both donors and governments that have shaped the implementation of SWAps at a process level. The paper concludes with some suggested actions which may assist in realigning health aid with the underlying SWAp theory of change, whilst taking into account at least some of the incentives and understandings that have cut across SWAp implementation. The essence of the proposed approach is a more realistic understanding of the nature of health systems, combined with a more politically informed set of strategies to support the development of these systems.
    Keywords: SWAps, aid effectiveness, health aid
    JEL: I10 F35 O20 O21
    Date: 2012–02
  3. By: Bastian Rake (Friedrich Schiller University Jena, Graduate College "The Economics of Innovative Change")
    Abstract: Recent empirical contributions emphasize the importance of (potential) market size for the development of new pharmaceuticals. At the same time many scholars point out the importance of of scientific advances for the industry's R&D activities. Against this background I analyze the relationship between (potential) market size, technological opportunities, and the number of new pharmaceuticals in the United States. Technological opportunities are operationalized as growth rates of the relevant knowledge stock as proposed by Andersen (1999, 1998). I analyze a unique dataset by using an "entry stock" Poisson quasi-maximum likelihood estimator. The results reveal a rather robust and significantly positive response of the number of new pharmaceuticals, i.e., new molecular entities or new drug approvals, to market size and technological opportunities.
    Keywords: Determinants of Innovation, Pharmaceuticals, Demand, Technological Opportunities
    JEL: O31 J10 J20
    Date: 2012–05–03
  4. By: Yeung, Gary Y.C. (VU University Amsterdam); van den Berg, Gerard J. (University of Mannheim); Lindeboom, Maarten (VU University Amsterdam); Portrait, France (VU University Amsterdam)
    Abstract: The aim of this study is to assess the effects of economic conditions in early life on cause-specific mortality during adulthood. The analyses are performed on a unique historical sample of 14,520 Dutch individuals born in 1880-1918, who are followed throughout life. The economic conditions in early life are characterized using cyclical variations in annual real per capital Gross Domestic Product during pregnancy and the first year of life. Exposure to recessions during pregnancy and/or the first year of life appears to significantly increase all-cause mortality risks and cancer mortality risks of older males and females. It also significantly increases mortality risks due to cardiovascular diseases and chronic respiratory diseases of older females. The residual life expectancies are up to 4.5 to 8% lower for all-cause mortality and up to 1.5 to 7.8% lower for cause-specific mortality. Our analyses show that cardiovascular and cancer mortality risks are related and that not taking this association into account leads to biased inference.
    Keywords: life expectancy, cancer, cardiovascular disease, survival analyses, competing mortality risks, recession
    JEL: I12 C41
    Date: 2012–04
  5. By: Bratberg, Espen (University of Bergen); Nilsen, Øivind Anti (Norwegian School of Economics (NHH)); Vaage, Kjell (University of Bergen)
    Abstract: This paper addresses whether children's exposure to parents receiving disability benefits induces a higher probability of receiving such benefits themselves. Most OECD countries experience an increasing proportion of the working-age population receiving permanent disability benefits. Using data from Norway, a country where around 10% of the working-age population rely on disability benefits, we find that the amount of time that children are exposed to their fathers receiving disability benefits affects their own likelihood of receiving benefits positively. This finding is robust to a range of different specifications, including family fixed effects.
    Keywords: disability, intergenerational correlations, siblings fixed effects
    JEL: H55 J62
    Date: 2012–04
  6. By: Grignon, Michel (McMaster University); Owusu, Yaw (McMaster University); Sweetman, Arthur (McMaster University)
    Abstract: Health workforce shortages in developed countries are perceived to be central drivers of health professionals' international migration, one ramification being negative impacts on developing nations' healthcare delivery. After a descriptive international overview, selected economic issues are discussed for developed and developing countries. Health labour markets' unique characteristics imply great complexity in developed economies involving government intervention, licensure, regulation, and (quasi-)union activity. These features affect migrants' decisions, economic integration, and impacts on the receiving nations' health workforce and society. Developing countries sometimes educate citizens in expectation of emigration, while others pursue international treaties in attempts to manage migrant flows.
    Keywords: migration, health professionals, international medical graduates
    JEL: J61 I15 I18
    Date: 2012–04
  7. By: Hammitt, James; Roman, Henry; Stieb, David; Walsh, Tyra
    Abstract: The monetized value of avoided premature mortality typically dominates the calculated benefits of air pollution regulations; therefore, characterization of the uncertainty surrounding these estimates is key to good policymaking. Formal expert judgment elicitation methods are one means of characterizing this uncertainty. They have been applied to characterize uncertainty in the mortality concentration-response function, but have yet to be used to characterize uncertainty in the economic values placed on avoided mortality. We report the findings of a pilot expert judgment study for Health Canada designed to elicit quantitative probabilistic judgments of uncertainties in Value-per-Statistical-Life (VSL) estimates for use in an air pollution context. The two-stage elicitation addressed uncertainties in both a base case VSL for a reduction in mortality risk from traumatic accidents and in benefits transferrelated adjustments to the base case for an air quality application (e.g., adjustments for age, income, and health status). Results for each expert were integrated to develop example quantitative probabilistic uncertainty distributions for VSL that could be incorporated into air quality models.
    Keywords: Value per statistical life, air pollution, expert judgment, uncertainty analysis
    Date: 2012–01
  8. By: Adler, Matthew; Hammitt, James; Treich, Nicolas
    Abstract: We examine how different welfarist frameworks evaluate the social value of mortality riskreduction. These frameworks include classical, distributively unweighted cost-benefit analysis—i.e., the “value per statistical life” (VSL) approach—and three benchmark social welfare functions (SWF): a utilitarian SWF, an ex ante prioritarian SWF, and an ex post prioritarian SWF. We examine the conditions on individual utility and on the SWF under which these frameworks display the following five properties: i) wealth sensitivity, ii) sensitivity to baseline risk, iii) equal value of risk reduction, iv) preference for risk equity, and v) catastrophe aversion. We show that the particular manner in which VSL ranks risk-reduction measures is not necessarily shared by other welfarist frameworks, and we identify when the use of an ex ante or an ex post approach has different implications for risk policymaking.
    Keywords: Value of statistical life, social welfare functions, cost-benefit analysis, equity
    JEL: D61 D63 D81 Q51
    Date: 2012–03
  9. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Yi Jin (Department of Economics, Monash University); Isaac Kalonda-Kanyama (Department of Economics, The University of Kansas)
    Abstract: We employ panel data from 40 countries in sub-Saharan Africa over the period 1990-2008 to examine whether HIV/AIDS has a causal effect on FDI. We find that HIV/AIDS has a negative but diminishing effect on FDI, and this adverse effect occurs even when the HIV prevalent rate is as low as 0.1 percent. The empirical result is then rationalized by a simple theoretical model.
    Keywords: Foreign Direct Investment, HIV/AIDS.
    JEL: F34 F35 I20 O19
    Date: 2012–04
  10. By: Sund, Björn (Dept. of Economics)
    Abstract: We explored how different response times from out-of-hospital cardiac arrest (OHCA) to defibrillation in the County of Stockholm, Sweden, affect patients’ survival rates. This was done by combining a geographic information systems (GIS) simulation of driving times with register data on survival rates. The emergency resources comprised ambulance alone and ambulance plus fire services. The simulation model predicted a baseline survival rate of 3.9 percent, and reducing the ambulance response time by one minute increased survival to 4.6 percent. Adding the fire services as first responders (dual dispatch) increased survival to 6.2 percent from the baseline level. The model predictions were vali-dated using empirical data.
    Keywords: out-of-hospital cardiac arrest; defibrillation; response time; survival rate; geographic information systems; fire services
    JEL: D61 H43 I10
    Date: 2012–05–02
  11. By: Laun, Tobias (Dept. of Economics, Stockholm School of Economics)
    Abstract: This paper analyzes optimal insurance against unemployment and disability in a private information economy with endogenous health and search effort. Individuals can reduce the probability of becoming disabled by exerting, so-called, prevention effort, which is costly in terms of utility. A healthy, i.e., not disabled, individual either works or is unemployed. An unemployed individual can exert search effort in order to increase the probability of finding a new job. I show that the optimal sequence of consumption is increasing for a working individual and constant for a disabled individual. During unemployment, decreasing benefits are not necessarily optimal in this setting. The prevention constraint implies increasing benefits over time while the search constraint demands decreasing benefits while being unemployed. However, if individuals respond sufficiently much to search incentives, the latter effect dominates the former and the optimal consumption sequence is decreasing during unemployment.
    Keywords: Unemployment insurance; Disability insurance; Optimal contracts
    JEL: D86 E24 H53 J65
    Date: 2012–03–09
  12. By: Emilia Del Bono; Chiara Daniela Pronzato
    Abstract: This paper asks whether the availability of breastfeeding facilities at the workplace helps to reconcile breastfeeding and work commitments. Using data from the 2005 UK Infant Feeding Survey, we model the joint probability to return to work and breastfeeding and analyse its association with the availability of breastfeeding facilities. Our findings indicate that the availability of breastfeeding facilities is associated with a higher probability of breastfeeding and a higher probability to return to work by 4 and 6 months after the birth of the child. The latter effects are only found for women with higher levels of education.
    Keywords: breastfeeding, cognitive development, child outcomes
    JEL: J13 C26
    Date: 2012
  13. By: Robert Sparrow; Ellen Van de Poel; Gracia Hadiwidjaja; Athia Yumna; Nila Warda; Asep Suryahadi
    Abstract: We assess the financial risk of ill health for households in Indonesia, the role of informal coping strategies, and the effectiveness of these strategies in smoothing consumption. Based on household panel data, we find evidence of financial risk from illness through medical expenses, while income from informal wage labour is exposed to risk for the poor and income from self-employed business activities for the non-poor. However, this lead to imperfect consumption smoothing only for the rural population and the poorest quartile; the non-poor seem to be able to maintain current spending. Borrowing and drawing on buffers, such as savings and assets, seem to be key informal coping strategies for the poor, which infers potential negative long term effects. While these results suggest scope for public intervention, the financial risk from income loss for the rural poor is beyond public health care financing reforms. Rather, formal sector employment, which reduces income risks, seems to be a key instrument for financial protection from illness.
    Keywords: Illness, income, consumption smoothing, coping strategies, Indonesia
    JEL: O15 I15
    Date: 2012
  14. By: Amitabh Chandra; Jonathan Gruber; Robin McKnight
    Abstract: Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through hospitalizations. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts’ Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service (hospital care, drugs, outpatient care). Overall, we find price elasticities of about -0.15 for this low-income population — fairly similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat larger for the chronically sick and older enrollees. A substantial portion of the decline in utilization comes from some patients cutting back on use completely, but we find no (detectable) evidence of offsetting increases in hospitalizations or emergency department visits in response to the higher copayments, either overall or for the chronically ill in particular.
    Date: 2012–04
  15. By: Jinhyung Lee; Jeffery S. McCullough; Robert J. Town
    Abstract: The US health care sector is, by most accounts, extraordinarily inefficient. Health information technology (IT) has been championed as a tool that can transform health care delivery. Recently, the federal government has taken an active role in promoting health IT diffusion. There is little systematic analysis of the causal impact of health IT on productivity or whether private and public returns to health IT diverge thereby justifying government intervention. We estimate the parameters of a value-added hospital production function correcting for endogenous input choices in order to assess the private returns hospitals earn from health IT. Despite high marginal products, the potential benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value-added. Virtually all the increase in value-added is attributable to the increased use of inputs{there was little change in hospital multi-factor productivity. Not-for-profits invested more heavily and differently in IT than for-profit hospitals. Finally, we find no evidence of labor complementarities or network externalities from health IT.
    JEL: D24 L31
    Date: 2012–04

This nep-hea issue is ©2012 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.