nep-hea New Economics Papers
on Health Economics
Issue of 2013‒05‒19
twenty-two papers chosen by
Yong Yin
SUNY at Buffalo

  1. The Composition of Health and Safety in Employment Sentences in New Zealand: An Empirical Analysis By Andrea Menclova; Alan Woodfield
  2. Long Run Returns to Education: Does Schooling Lead to an Extended Old Age? By Hans van Kippersluis; Owen O'Donnell; Eddy van Doorslaer
  3. Long-Run Effects of Gestation during the Dutch Hunger Winter Famine on Labor Market and Hospitalization Outcomes By Robert S. Scholte; Gerard J. van den Berg; Maarten Lindeboom
  4. Effects of NCMS Coverage on Access to Care and Financial Protection in China By Zhiyuan Hou; Ellen Van de Poel; Eddy Van Doorslaer; Baorong Yua; Qingyue Menge
  5. Scale, Scope and Cognition: Context Analysis of Multiple Stated Choice Experiments on the Values of Life and Limb By Marija Bockarjova; Piet Rietveld; Erik T. Verhoef
  6. Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury By Marija Bockarjova; Piet Rietveld; Erik T. Verhoef
  7. Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution By Claudine de Meijer; Marc Koopmanschap; Owen O'Donnell; Eddy van Doorslaer
  8. Childhood Intelligence and Adult Mortality, and the Role of Socio-Economic Status By Jan S. Cramer
  9. Catastrophic Medical Expenditure Risk By Gabriela Flores; Owen O'Donnell
  10. Inequity in the Face of Death By Pilar Garcia-Gomez; Erik Schokkaert; Tom Van Ourti; Teresa Bago d'Uva
  11. Can Risk Adjustment prevent Risk Selection in a Competitive Long-Term Care Insurance Market? By Piet Bakx; Erik Schut; Eddy van Doorslaer
  12. Regulation of Road Accident Externalities when Insurance Companies have Market Power By Maria Dementyeva; Paul R. Koster; Erik T. Verhoef
  13. Why the Rich Drink More but Smoke Less: The Impact of Wealth on Health Behaviors By Hans van Kippersluis; Titus J. Galama
  14. Education and Health: The Role of Cognitive Ability By Govert Bijwaard; Hans van Kippersluis; Justus Veenman
  15. Global health governance and tropical diseases By Till Bärnighausen; David E. Bloom; Salal Humair
  16. The Economic Case for Devoting Public Resources to Health By David E. Bloom; Günther Fink
  17. Maternal Employment and Childhood Obesity: A European Perspective By Gwozdz, Wencke; Sousa-Poza, Alfonso; Reisch, Lucia A.; Ahrens, Wolfgang; De Henauw, Stefaan; Eiben, Gabriele; Fernández-Alvira, Juan M.; Hadjigeorgiou, Charalampos; Kovács, Eva; Lauria, Fabio; Veidebaum, Toomas; Williams, Garrath; Bammann, Karin
  18. Disease and Development Revisited By Bloom, David E.; Canning, David; Fink, Günther
  19. Is Smoking Behavior Culturally Determined? Evidence from British Immigrants By Rebekka Christopoulou; Dean R. Lillard
  20. Aggregation and The Estimated Effects of Local Economic Conditions on Health By Jason M. Lindo
  21. "Is Elderly Care Socialized in Japan? Analyzing the Effects of the 2006 Amendment to the LTCI on the Female Labor Supply" By Shinya Sugawara; Jiro Nakamura
  22. Health and Wealth on the Roller-Coaster: Ireland, 2003-2011 By David Madden

  1. By: Andrea Menclova (University of Canterbury); Alan Woodfield (University of Canterbury)
    Abstract: Sentences for employers convicted of offences under NZ health and safety in employment law have been subject to constraints from two main sources (i) legislation; and (ii) guideline judgment cases. This paper analyses the determinants of HSE offences over the period following the introduction of the De Spa Guidelines in March 1994 to the Hanham & Philp Guideline judgment in December 2008, and also splits the period to account for the implementation of the Sentencing Act 2002 and the HSE Amendment Act 2002. Among the De Spa Guidelines we find that the level of harm in particular, and employer culpability are not only consistently represented among significant determinants of HSE sentences in respect of fines and total liability faced by employers, but also emerge as important determinants of awards to accident victims. These results hold at the single s 6 charge level and at the case level, as well as for alternative specifications of our estimating model. Considering the two periods separately, we find that estimated coefficients are considerably larger in magnitude for the latter period. Results for the remaining De Spa factors and case-specific facts are less robust, although a defendant’s financial limitations provides a consistent and sizable fine discount, and several others also regularly appear as systematic HSE sentencing determinants.
    Keywords: Health & Safety Offences; Judicial Guidelines; Sentencing Determinants
    JEL: K32
    Date: 2013–04–29
  2. By: Hans van Kippersluis (Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam, University of Macedonia, Thessaloniki, Greece); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: While there is no doubt that health is strongly correlated with education, whether schooling exerts a causal impact on health is not yet firmly established. We exploit Dutch compulsory schooling laws in a Regression Discontinuity Design applied to linked data from health surveys, tax files and the mortality register to estimate the causal effect of education on mortality. The reform provides a powerful instrument, significantly raising years of schooling, which, in turn, has a large and significant effect on mortality even in old age. An extra year of schooling is estimated to reduce the probability of dying between ages of 81 and 88 by 2-3 percentage points relative to a baseline of 50 percent. High school graduation is estimated to reduce the probability of dying between the ages of 81 and 88 by a remarkable 17-26 percentage points but this does not appear to be due to any sheepskin effects of finishing high school on mortality beyond that predicted lin early by additional years of schooling.
    Keywords: Health, Mortality, Education, Causality, Regression Discontinuity
    JEL: D30 D31 I10 I12
  3. By: Robert S. Scholte (VU University Amsterdam); Gerard J. van den Berg (University of Mannheim, VU University Amsterdam); Maarten Lindeboom (VU University Amsterdam)
    Abstract: This is the first study to analyze effects of in utero exposure to the severe Dutch Hunger Winter famine (1944/45) on labor market outcomes and hospitalization. This famine is clearly demarcated in time and space. It was not anticipated. Nutritional conditions were stable before and after the famine. We provide results of exposure by sub-interval of gestation. We are the first to use population registers for the full population. We find a significantly negative effect of exposure during the first trimester of gestation on employment outcomes 53 or more years after birth, as well as effects on hospitalization.
    Keywords: famine, long-run effects, labor and hospitalization outcomes
    JEL: I10 I12 J01 J13 J24
    Date: 2012–02–14
  4. By: Zhiyuan Hou (Shandong University, Jinan, China); Ellen Van de Poel (Erasmus University Rotterdam, Netherlands); Eddy Van Doorslaer (Erasmus University Rotterdam, Netherlands); Baorong Yua (Shandong University, Jinan, China); Qingyue Menge (Peking University, China)
    Abstract: The introduction of the New Cooperative Medical Scheme in rural China is one of the largest health care reforms in the developing world since the millennium. The literature to date has mainly used the uneven rollout of NCMS across counties as a way of identifying its effects on access to care and financial protection. This study exploits the cross-county variation in NCMS generosity in 2006 and 2008 in Ningxia and Shandong province and adopts an instrumenting approach to estimate the effect of a continuous measure of coverage level. Our results confirm earlier findings of NCMS being effective in increasing access to care, but not increasing financial protection. In addition, we find that NCMS enrollees are sensitive to the incentives set in the NCMS design when choosing their provider, but also that providers seem to respond by increasing prices and/or providing more expensive care.
    Keywords: Health insurance, access, financial protection, China
    JEL: D63 I14
    Date: 2012–04–16
  5. By: Marija Bockarjova (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam)
    Abstract: In this paper we use data from an SP study on flood safety in the Netherlands, and elicit individual preferences for reduction of risk to life and limb. We perform context analysis to test the robustness of fatality risk valuation throughout choice experiments. The main interest of this paper is VOSL sensitivity to the valuation of correlated risks (scope effect). Besides, we explore the role of cognition on the stability of valuation across choice experiments using age and education. We pool data from multiple choice experiments and apply nested and mixed logit models in our analysis. We confirm statistically significant sensitivity to scope, comparing VOSL estimates for the test group in a choice experiment where correlated risks were present (risks of fatality, injury and evacuation) to an experiment where only fatality risk is valued. We find that the origin of differences in VOSL valuations across the choice experiments lies in differences in age and educational attainment, and may therefore be related to cognitive abilities of respondents. In particular, we conclude that higher VOSL sensitivity to scope is most prominently present among respondents of senior age (65 and older) and respondents without college education. This finding has important implications for discrete choice modeling and the use of obtained values in cost-benefit analyses.
    Keywords: stated preferences, value of statistical life, value of statistical injury, value of statistical evacuation, flood risk
    JEL: C01 C33 C83 C90 D12 D61 Q51 Q54
    Date: 2012–04–26
  6. By: Marija Bockarjova (VU University Amsterdam); Piet Rietveld (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam)
    Abstract: This paper enriches existing valuation literature in a number of ways by presenting context-specific estimates of immaterial damage. First, it offers an estimation of value of statistical life (VOSL) in the context of a natural hazard (flooding). Next, as one of the contributions, alongside with less biased estimate of VOSL (euro 6.8 mln) it also provides estimates of the value of statistical injury (VOSI, euro 92,000), and of the value of statistical evacuation (VOSE, euro 2,400). Our estimated indicators are plausible and stay robust throughout various estimations. For flood protection policy in the Netherlands, a higher value of VOSL forthcoming from this research would imply 'underprotection' under current conditions. Another important finding concerns the composition of the total value of immaterial damages, where value of fatalities or value of evacuation may dominate depending on the prevailing floor risk circumstances. This implies that, first, VOSL is not an adequate proxy for immaterial damages since it understates prospective benefits of designated protective measures. Second, spatially differentiated composition of immaterial damages should be explicitly considered to guide policy decisions.
    Keywords: cost-benefit analysis, natural hazard, flood risk, stated preferences, choice experiment
    JEL: C01 C33 C83 C90 D12 D61 Q51 Q54
    Date: 2012–04–26
  7. By: Claudine de Meijer (Erasmus University Rotterdam); Marc Koopmanschap (Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: Explanations of growth in health expenditures have restricted attention to the mean. We explain change throughout the distribution of expenditures, providing insight into how growth and its explanation differ along the distribution. We analyse Dutch data on actual health expenditures linked to hospital discharge and mortality registers. Full distribution decomposition delivers findings that would be overlooked by examination of changes in the mean alone. The growth in expenditures on hospital care is strongest at the middle of the distribution and is driven mainly by changes in the distributions of determinants. Pharmaceutical expenditures increase most at the top of the distribution and are mainly attributable to structural changes, including technological progress, making treatment of the highest cost cases even more expensive. Changes in hospital practice styles make the largest contribution of all determinants to increased spending not only on hospital care but also on pharmaceuticals, suggesting important spill over effects.
    Keywords: Health care expenditure, decomposition, aging, pharmaceuticals, the Netherlands
    JEL: I10
    Date: 2012–05–08
  8. By: Jan S. Cramer (University of Amsterdam)
    Abstract: The initial purpose of this study was to establish the effect of childhood conditions on longevity from the Brabant data set. This data set combines information at ages 12, 43, 53 and mortality between 53 and 71 for a sample of some 3000 individuals born around 1940 in the Dutch province of North Brabant. Proportional hazard analysis confirms the known association of early intelligence or cognitive ability with longevity, with a standardized hazard ratio of .80; this is the only significant childhood influence. Among men, the effect of some elements of adult socio-economic status can also be ascertained: education, income and wealth are each found to contribute about as much to a longer life as intelligence. The joint effect of all four variables is dominated by childhood intelligence and adult wealth at the expense of education and income.
    Keywords: Cognitive ability, mortality, socio-economic status, proportional hazards
    JEL: C21 I14
    Date: 2012–07–17
  9. By: Gabriela Flores (Institute of Health Economics and Management, University of Lausanne, and Institute of Health Policy and Management, Erasmus University Rotterdam); Owen O'Donnell (Erasmus School of Economics, Erasmus University Rotterdam, and University of Macedonia, Greece)
    Abstract: Medical expenditure risk can pose a major threat to living standards. We derive decomposable measures of catastrophic medical expenditure risk from reference-dependent utility with loss aversion. We propose a quantile regression based method of estimating risk exposure from cross-section data containing information on the means of financing health payments. We estimate medical expenditure risk in seven Asian countries and find it is highest in Laos and China, and is lowest in Malaysia. Exposure to risk is generally higher for households that have less recourse to self-insurance, lower incomes, wealth and education, and suffer from chronic illness.
    Keywords: medical expenditures, catastrophic payments, downside risk, reference-dependent utility, Asia
    JEL: D12 D31 D80 I15
    Date: 2012–07–24
  10. By: Pilar Garcia-Gomez (Erasmus University Rotterdam); Erik Schokkaert (Universite Cath. de Louvain); Tom Van Ourti (Erasmus University Rotterdam); Teresa Bago d'Uva (Erasmus University Rotterdam)
    Abstract: We apply the theory of inequality in opportunity to measure inequity in mortality. Our empirical work is based on a rich dataset for the Netherlands (1998-2007), linking information about mortality, health events and lifestyles. We show that distinguishing between different channels via which mortality is affected is necessary to test the sensitivity of the results with respect to different normative positions. Moreover, our model allows for a comparison of the inequity in simulated counterfactual situations, including an evaluation of policy measures. We explicitly make a distinction between inequity in mortality risks and inequity in mortality outcomes. The treatment of this difference - “luck”- has a crucial in‡uence on the results.
    Keywords: equity, equality of opportunities, mortality, lifestyles
    JEL: D63 I12 I14
    Date: 2012–08–20
  11. By: Piet Bakx (Erasmus University Rotterdam); Erik Schut (Erasmus University Rotterdam); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: When public long-term care (LTC) insurance is provided by insurers, they typically lack incentives for purchasing cost-effective LTC. Providing insurers with appropriate incentives for efficiency without jeopardizing access for high-risk individuals requires, among other things, an adequate system of risk adjustment. While risk adjustment is now widely adopted in health insurance, it is unclear whether adequate risk adjustment is feasible for LTC because of its specific features. We examine the feasibility of risk adjustment for LTC insurance using a rich set of linked nationwide Dutch administrative data. Prior LTC use and demographic information are found to explain much of the variation, while prior health care expenditures are important in reducing predicted losses for subgroups of health care users. Nevertheless, incentives for risk selection against some easily identifiable subgroups persist. Moreover, using prior utilization and expenditure as risk adjusters dilutes incentives for efficiency, but using multiyear data may reduce this disadvantage.
    Keywords: risk adjustment, long-term care, managed competition, public insurance
    JEL: H51 I11 I18 L13
    Date: 2013–01–17
  12. By: Maria Dementyeva (VU University Amsterdam); Paul R. Koster (VU University Amsterdam); Erik T. Verhoef (VU University Amsterdam)
    Abstract: Accident externalities are among the most important external costs of road transport. We study the regulation of these when insurance companies have market power. Using analytical models, we compare a public-welfare maximizing monopoly with a private profit-maximizing monopoly, and markets where two or more firms compete. A central mechanism in the analysis is the accident externality that individual drivers impose on one another via their presence on the road. Insurance companies will internalize some of these externalities, depending on their degree of market power. We derive optimal insurance premiums, and "manipulable" taxes that take into account the response of the firm to the tax rule applied by the government. Furthermore, we study the taxation of road users under different assumptions on the market structure. We illustrate our analytical results with numerical examples, in order to better understand the determinants of the relative performance of different market structures.
    Keywords: accident externalities, traffic regulation, safety, second-best, market power
    JEL: D43 D62 R41 R48
    Date: 2013–01–18
  13. By: Hans van Kippersluis (Erasmus University Rotterdam); Titus J. Galama (University of Southern California, Dornsife College Center for Economic and Social Research & RAND Corporation, USA)
    Abstract: Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by developing a theory of health behavior, and exploiting both lottery winnings and inheritances to test the theory. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed provide an explanation for behavioral differences, and ultimately health outcomes, between wealth groups.
    Keywords: consumption, health, health capital, health behavior, wealth
    JEL: D91 I10 I12 I14 J24
    Date: 2013–03–05
  14. By: Govert Bijwaard (NIDI, The Hague, IZA, Bonn); Hans van Kippersluis (Erasmus University Rotterdam); Justus Veenman (Erasmus University Rotterdam)
    Abstract: We aim to disentangle the relative contributions of (i) cognitive ability, and (ii) education on health and mortality using a structural equation model suggested by Conti et al. (2010). We extend their model by allowing for a duration dependent variable, and an ordinal educational variable. Data come from a Dutch cohort born around 1940, including detailed measures of cognitive ability and family background at age 12. The data are subsequently linked to the mortality register 1995-2011, such that we observe mortality between ages 55 and 75. The results suggest that the treatment effect of education (i.e. the effect of entering secondary school as opposed to leaving school after primary education) is positive and amounts to a 4 years gain in life expectancy, on average. Decomposition results suggest that the raw survival differences between educational groups are about equally split between a 'treatment effect' of education, and a 'selection effect' on basis of cognitive ability and family background.
    Keywords: Education, Cognitive Ability, Mortality, Structural Equation Model, Duration Model
    JEL: C41 I14 I24
    Date: 2013–03–15
  15. By: Till Bärnighausen (Harvard School of Public Health); David E. Bloom (Harvard School of Public Health); Salal Humair (Harvard School of Public Health)
    Abstract: In this chapter, we briefly review the overall system of global health governance and its evolution over the last decade, the emerging challenges it faces, its strengths and weaknesses, and how these strengths and weaknesses affect the system’s ability to address tropical diseases in the future.
    Keywords: Global health governance, Tropical diseases
    Date: 2013–05
  16. By: David E. Bloom (Harvard School of Public Health); Günther Fink (Harvard School of Public Health)
    Abstract: The world has enjoyed huge improvements in population health during the last half century. But major health problems persist, particularly in tropical countries, which are still struggling with infectious diseases while increasingly having to deal with noncommunicable diseases. Several classic arguments for public spending on health have buttressed governments’ efforts to improve health. These efforts have now been further spurred by new economic arguments that better population health may promote economic well-being – via beneficial changes in labor productivity, education, and investment, and through demographic change. The economic consequences of improved health can be large, but realizing them depends on the policies adopted in myriad other arenas.
    Keywords: Public resources, Noncommunicable disease, Economic impacts of health
    Date: 2013–05
  17. By: Gwozdz, Wencke (Copenhagen Business School); Sousa-Poza, Alfonso (University of Hohenheim); Reisch, Lucia A. (Copenhagen Business School); Ahrens, Wolfgang (University of Bremen); De Henauw, Stefaan (Ghent University); Eiben, Gabriele (University of Gothenburg); Fernández-Alvira, Juan M. (University of Zaragoza); Hadjigeorgiou, Charalampos (affiliation not available); Kovács, Eva (affiliation not available); Lauria, Fabio (affiliation not available); Veidebaum, Toomas (affiliation not available); Williams, Garrath (Lancaster University); Bammann, Karin (University of Bremen)
    Abstract: The substantial increase in female employment rates in Europe over the past two decades has often been linked in political and public rhetoric to negative effects on child development, including obesity. We analyse this association between maternal employment and childhood obesity using rich objective reports of various anthropometric and other measures of fatness from the IDEFICS study of children aged 2-9 in 16 regions of eight European countries. Based on such data as accelerometer measures and information from nutritional diaries, we also investigate the effects of maternal employment on obesity's main drivers: calorie intake and physical activity. Our analysis provides little evidence for any association between maternal employment and childhood obesity, diet or physical activity.
    Keywords: maternal employment, children, obesity, Europe
    JEL: I12 J13 J22
    Date: 2013–04
  18. By: Bloom, David E. (Harvard University); Canning, David (Harvard School of Public Health); Fink, Günther (Harvard School of Public Health)
    Abstract: Acemoglu and Johnson (2007) present evidence that improvements in population health do not promote economic growth. We show that their result depends critically on the assumption that initial health has no causal effect on subsequent economic growth. We argue that such an effect is likely, primarily because childhood health affects adult productivity. In our augmented model, which includes initial health, the instrumental variable proposed by Acemoglu and Johnson has no significant predictive power for improvements in health and does not identify the effect of contemporaneous improvements in health on economic growth.
    Keywords: health, development, economic growth
    JEL: I10 O40
    Date: 2013–05
  19. By: Rebekka Christopoulou; Dean R. Lillard
    Abstract: We exploit migration patterns from the UK to Australia, South Africa, and the US to investigate whether a person’s decision to smoke is determined by culture. For each country, we use retrospective data to describe individual smoking trajectories over the life-course. For the UK, we use these trajectories to measure culture by cohort and cohort-age, and more accurately relative to the extant literature. Our proxy predicts smoking participation of second-generation British immigrants but not that of non-British immigrants and natives. Researchers can apply our strategy to estimate culture effects on other outcomes when retrospective or longitudinal data are available.
    JEL: I10 J15 Z10
    Date: 2013–05
  20. By: Jason M. Lindo
    Abstract: This paper considers the relationship between local economic conditions and health with a focus on different approaches to geographic aggregation. After reviewing the tradeoffs associated with more- and less-disaggregated analyses–including an investigation of the migratory response to changing economic conditions–I update earlier state-level analyses of mortality and infant health and then consider how the estimated effects vary when the analysis is conducted at differing levels of geographic aggregation. This analysis reveals that more-disaggregated analyses severely understate the extent to which downturns are associated with improved health. Further investigation reveals that county economic conditions have an independent effect on mortality but that state and regional economic conditions are stronger predictors. I also leverage county-level data to explore heterogeneity in the link between county economic conditions and health across states, demonstrating that local downturns lead to the greatest improvements in health in low-income states.
    JEL: E32 I10 J20
    Date: 2013–05
  21. By: Shinya Sugawara (Faculty of Economics, University of Tokyo); Jiro Nakamura (Advanced Research Institute for the Sciences and Humanities, Nihon University)
    Abstract:       This study evaluates the Japanese Long-Term Care Insurance(LTCI) a decade after its launch, focusing on the effects of its 2006 amendment. The radical program led to the emergence of markets for various care services such as home care, daycare and temporary institutional care besides permanent institutional care, which comprises only a formal care sector in many developed countries. We analyze the labor market behavior of women who face requirement for elderly care in their household, under the availability of the various formal care services. Our empirical analysis shows that the 2006 amendment reduced the negative impacts of care requirement both on the rate of female labor force participation and their working hours. However, our results also indicate that regular workers are more likely to utilize formal care, while many non-regular workers provide informal care by themselves.
    Date: 2013–05
  22. By: David Madden (University College Dublin)
    Abstract: This paper reviews developments in income and health poverty in Ireland over the 2003-2011 period using data from the Survey of Income and Living Conditions (SILC). It also examines developments in the correlation between the two. Income poverty fell up to and including 2009, after which this trend is reversed. Health poverty shows less of a trend over the period though there is some evidence of a reduction in health inequality from 2006. Movements in bi-dimensional poverty are mostly driven by income poverty, but there is evidence of a reduction in the correlation between health and income poverty over the period.
    Keywords: multidimensional poverty; dominance
    JEL: I12 I31 I32
    Date: 2013–05–15

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