nep-hea New Economics Papers
on Health Economics
Issue of 2013‒09‒26
fourteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Mental Illness and Unhappiness By Dan Chisholm; Richard Layard; Vikram Patel; Shekhar Saxena
  2. Modelling the impact of HIV/AIDS: A literature review By Louise Roos
  3. Private, social and self-insurance for long-term care in the presence of family help: A political economy analysis By De Donder, Philippe; Pestieau, Pierre
  4. Poverty and Transitions in Health By Maja Adena; Michal Myck
  5. Waste Not, Want Not: The Efficiency of Health Expenditure in Emerging and Developing Economies By Francesco Grigoli; Javier Kapsoli
  6. Accounting for the Rise of Health Spending and Longevity By Raquel Fonseca; Pierre-Carl Michaud; Arie Kapteyn; Titus Galama
  7. Recessions, Healthy No More? By Christopher J. Ruhm
  8. Is the Affordable Care Act Different from Romneycare? A Labor Economics Perspective By Casey B. Mulligan
  9. Health Insurance for “Humans”: Information Frictions, Plan Choice, and Consumer Welfare By Benjamin R. Handel; Jonathan T. Kolstad
  10. The Impact of Insurance and HIV Treatment Technology on HIV Testing By Neeraj Sood; Yanyu Wu
  11. How Consumer Price Subsidies affect Nutrition By Neeraj Kaushal; Felix Muchomba
  12. Wage Compensation for Risk: The Case of Turkey By Polat, Sezgin
  13. Does Personality Affect how People Perceive their Health? By Dusanee Kesavayuth; Robert Rosenman; Vasileios Zikos
  14. Socio-demographic determinants of planning suicide and marijuana use among youths: are these patterns of behaviour causally related? By Rosa Duarte; José Julián Escario; José Alberto Molina

  1. By: Dan Chisholm; Richard Layard; Vikram Patel; Shekhar Saxena
    Abstract: This paper is a contribution to the second World Happiness Report. It makes five main points: 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if mental health is included with a six-year lag. It explains more of the variance of life-satisfaction in the population of a country than physical health does, and much more than unemployment and income do. Income explains 1% of the variance of life-satisfaction or less. 2. Much the most common forms of mental illness are depression and anxiety disorders. Rigorously defined, these affect about 10% of all the world's population - and prevalence is similar in rich and poor countries. 3. Depression and anxiety are more common during working age than in later life. They account for a high proportion of disability and impose major economic costs and financial losses to governments worldwide. 4. Yet even in rich countries, under a third of people with diagnosable mental illness are in treatment. 5. Cost-effective treatments exist, with recovery rates of 50% or more. In rich countries treatment is likely to have no net cost to the Exchequer due to savings on welfare benefits and lost taxes. But even in poor countries a reasonable level of coverage could be obtained at a cost of under $2 per head of population per year.
    Keywords: Mental illness, welfare benefits, healthcare costs, life-satisfaction
    JEL: I10 I14 I18
    Date: 2013–09
  2. By: Louise Roos
    Abstract: A number of methods and models have been used to analyse the economic impacts of HIV/AIDS. The overall consensus is that depending on the severity of the epidemic, HIV/AIDS holds serious negative consequences for economic growth and economic welfare. The aim of this paper is to give a broad overview of the methodologies used in analysing the economic impact of HIV/AIDS on various countries, including South Africa. The literature review is structured by method of analysis. For each method, selected papers are briefly described. This paper is set out as follows: Section 1 describes studies using econometric estimation. This method is useful in cross-country analysis and allows for the impact of the disease to be compared internationally. Section.2 describes studies applying country-specific macroeconometric models to examine the impact of HIV/AIDS. Section 3 describes the use of aggregate growth models. These models extend the Solow model, allowing HIV/AIDS to be captured via the reduction in employment and population growth. These country-specific models are useful in analysing the impact of HIV/AIDS on economic growth and per capita income. Section 4 describes the use of country-specific CGE models in the analysis of HIV/AIDS. Section 5 reviews other methods used for analysing the impact of HIV/AIDS on an economy. These methods include overlapping-generations models, demographic models and sector-specific analysis. The paper ends with concluding remarks. .
    Keywords: HIV/AIDS, Africa
    JEL: I19 O55
    Date: 2013–05
  3. By: De Donder, Philippe; Pestieau, Pierre
    Abstract: We study the political determination of the level of social long-term care insurance when voters also choose private insurance and saving amounts. Agents differ in income, probability of becoming dependent and of receiving family help. Social insurance redistributes across income and risk levels, while private insurance is actuarially fair. The income-to-risk ratio of agents determines whether they prefer social or private insurance. Family support crowds out the demand for both social and, especially, private insurance, as strong prospects of family help drive the demand for private insurance to zero. The availability of private insurance decreases the demand for social insurance but need not decrease its majority chosen level.
    Keywords: crowding out; familism; long-term care; social insurance; voting; weak and strong prospects of family help
    JEL: D72 I13 J14
    Date: 2013–08
  4. By: Maja Adena; Michal Myck
    Abstract: Using a sample of Europeans aged 50+ from twelve countries in the Survey of Health, Ageing and Retirement in Europe (SHARE) we analyse the role of poor material conditions as a determinant of changes in health over a four-year period. We find that poverty defined with respect to relative incomes has no effect on changes in health. However, broader measures of poor material conditions such as subjective poverty or low relative value of wealth significantly increase the probability of transition to poor health among the healthy and reduce the chance of recovery from poor health over the time interval analysed. In addition to this the subjective measure of poverty has a significant effect on mortality, increasing it by 40.3% among men and by 58.3% among those aged 50-64. Material conditions matter for health among older people. We suggest that if monitoring of poverty in old age and corresponding policy targets are to focus on the relevant measures, they should take into account broader definitions of poverty than those based only on relative incomes.
    Keywords: health transitions, material conditions, poverty, mortality
    JEL: I14 I32 J14
    Date: 2013
  5. By: Francesco Grigoli; Javier Kapsoli
    Abstract: Public health spending is low in emerging and developing economies relative to advanced economies and health outputs and outcomes need to be substantially improved. Simply increasing public expenditure in the health sector, however, may not significantly affect health outcomes if the efficiency of this spending is low. This paper quantifies the inefficiency of public health expenditure and the associated potential gains for emerging and developing economies using a stochastic frontier model that controls for the socioeconomic determinants of health, and provides country-specific estimates. The results suggest that African economies have the lowest efficiency. At current spending levels, they could boost life expectancy up to about five years if they followed best practices.
    Keywords: Government expenditures;Health care;Emerging markets;Developing countries;Economic models;Health expenditure, efficiency, emerging economies, developing economies
    Date: 2013–08–28
  6. By: Raquel Fonseca; Pierre-Carl Michaud; Arie Kapteyn; Titus Galama
    Abstract: We estimate a stochastic life-cycle model of endogenous health spending, asset accumulation and retirement to investigate the causes behind the increase in health spending and longevity in the U.S. over the period 1965-2005. We estimate that technological change and the increase in the generosity of health insurance on their own may explain 36% of the rise in health spending (technology 30% and insurance 6%), while income explains only 4% and other health trends 0.5%. By simultaneously occurring over this period, these changes may have led to complementarity effects which we find to explain an additional 57% increase in health spending. The estimates suggest that the elasticity of health spending with respect to changes in both income and insurance is larger with co-occurring improvements in technology. Technological change, taking the form of increased health care productivity at an annual rate of 1.3%, explains almost all of the rise in life expectancy at age 25 over this period while changes in insurance and income together explain less than 10%. Welfare gains are substantial and most of the gain appears to be due to technological change.
    Keywords: Demand for health, life cycle, health spending, technology, insurance, longevity
    JEL: J01 I1 O33
    Date: 2013
  7. By: Christopher J. Ruhm
    Abstract: Using data from multiple sources, over the 1976-2009 period, I show that total mortality has shifted over time from strongly procyclical to being essentially unrelated to macroeconomic conditions. The relationship also shows some instability over time and is likely to be poorly measured when using short (less than 15 or 20 year) analysis periods. The secular change in the association between macroeconomic conditions and overall mortality primarily reflects trends in effects for specific causes of death, rather than changes in the composition of total mortality across causes. Deaths due to cardiovascular disease and transport accidents continue to be procyclical (although possibly less so than in the past), whereas strong countercyclical patterns of cancer fatalities and some external sources of death (particularly those due to accidental poisoning) have emerged over time. The changing effect of macroeconomic conditions on cancer deaths may partially reflect the increasing protective influence of financial resources, perhaps because these can be used to obtain sophisticated (and expensive) treatments that have become available in recent years. That observed for accidental poisoning probably has occurred because declines in mental health during economic downturns are increasingly associated with the use of prescribed or illicitly obtained medications that carry risks of fatal overdoses.
    JEL: E3 I1 I12 I18
    Date: 2013–08
  8. By: Casey B. Mulligan
    Abstract: Measured in percentage points, the Affordable Care Act will, by 2015, add about twelve times more to average marginal labor income tax rates nationwide than the Massachusetts health reform added to average rates in Massachusetts following its 2006 statewide health reform. The rate impacts are different between the two laws for several reasons, especially that: the populations subject to the two laws are different, the Affordable Care Act’s employer penalty is an order of magnitude greater, before either reform Massachusetts had already been offering more means-tested and employment-tested health insurance assistance than other states had, and the subsidized health insurance plans created by the Massachusetts reform were less substitutable for employer-provided insurance than are the subsidized plans to be created nationwide next year.
    JEL: E24 H31 I18 I38
    Date: 2013–08
  9. By: Benjamin R. Handel; Jonathan T. Kolstad
    Abstract: Traditional models of insurance choice are predicated on fully informed and rational consumers protecting themselves from exposure to financial risk. In practice, choosing an insurance plan from a set of complex non-linear contracts is a complicated decision often made without full information on several potentially important dimensions. In this paper we combine new administrative data on health plan choices and claims with unique survey data on consumer information and other typically unobserved preference factors in order to separately identify risk preferences, information frictions, and perceived plan hassle costs. The administrative and survey data are linked at the individual level, allowing in-depth investigations of the links between these micro- foundations in both descriptive and choice-model based analyses. We find that consumers lack information on many important dimensions that they are typically assumed to understand, perceive high plan hassle costs, and make choices that depend on these frictions. Moreover, in the context of an expected utility model, including the additional frictions that we measure has direct implications for risk preference estimates, which are typically assumed to be the only source of persistent unobserved preference heterogeneity in such models. In our setting, we show that incorporating measures of these frictions leads to meaningful reductions in estimated consumer risk aversion. This result has both positive and normative implications since risk aversion generally has different welfare implications than information frictions. We assess the welfare impact of a counterfactual menu design and find that the welfare loss from risk exposure when additional frictions are not taken into account is more than double that when they are, illustrating the potential importance of our analysis for policy decisions.
    JEL: D8 D83 G22 I13
    Date: 2013–08
  10. By: Neeraj Sood; Yanyu Wu
    Abstract: This paper investigates the effects of health insurance and new antiviral treatments on HIV testing rates among the U.S. general population using nationally representative data from the Behavioral Risk Factor Surveillance Survey (BRFSS) for the years 1993 to 2002. We estimate recursive bivariate probit models with insurance coverage and HIV testing as the dependent variables. We use changes in Medicaid eligibility and distribution of firm size over time within a state as instruments for insurance coverage. The results suggest that (a) insurance coverage increases HIV testing rates, (b) insurance coverage increases HIV testing rates more among the high risk population, and (c) the advent of Highly Active Antiretroviral Therapy (HAART) increases the effects of insurance coverage on HIV testing for high risk populations.
    JEL: I12 I13
    Date: 2013–09
  11. By: Neeraj Kaushal; Felix Muchomba
    Abstract: We study the effect on nutrition of an exogenous increase in food price subsidy from a targeted subsidy program in India. Households with incomes below the federal poverty threshold were issued ration cards to buy wheat and rice at half the market price. We use probability of ration card ownership as an instrumental variable to predict household food price subsidy. Estimates suggest that the predicted price subsidy had a negligible to negative effect on calorie intake; it increased calorie intake from wheat and rice, but lowered calorie intake from coarse grains that are less expensive substitutes of wheat and rice, but have fewer non-nutritional attributes (such as taste).
    JEL: I10 I32 I38
    Date: 2013–09
  12. By: Polat, Sezgin (Galatasaray University Economic Research Center)
    Abstract: In this article, I estimate the premium associated with fatal and non-fatal risk within broad industry categories, using official figures provided by the Ministry of Labor and Social Security and wage data from the 2010 and 2011 Household Labor Force Surveys. The results show only positive and significant fatal risk premiums in the manufacturing sector, whereas injury risk premiums exist in both the manufacturing and industry-wide samples. When wage heterogeneity is allowed, fatal risk compensation increases along the distribution, while that of injury risk follows an inverse-u pattern. Compared to similar country cases, the VSL and VSI estimates are relatively small and not significant for low wage earners. Industry averages show that longer working hours are correlated with accidents rates which implies the importance of firm heterogeneity and institutional factors on the high level and variance, particularly for Turkey.
    Keywords: Value of a statistical life; Value of a statistical injury; Hedonic wages; Quantile regression
    JEL: J17 J28
    Date: 2013–09–18
  13. By: Dusanee Kesavayuth; Robert Rosenman; Vasileios Zikos (School of Economic Sciences, Washington State University)
    Abstract: We examine how personality relates to self-reported health satisfaction. With a nation-wide dataset from the United Kingdom, we provide evidence that personality influences how individuals report their satisfaction with their overall health. Using the classification of personality traits according to the Big Five factors, we show that Agreeableness, Conscientiousness and to a lesser extent Openness relate positively to health satisfaction, while Neuroticism relates negatively. Extraversion appears much less closely tied to health satisfaction. Perhaps most interesting, our results provide some evidence that personality traits mitigate the importance of the incidence of illness on health satisfaction.
    Keywords: health satisfaction, personality, Big Five factors, illness, subjective well-being
    JEL: C25 I10
    Date: 2013
  14. By: Rosa Duarte (Department of Economic Analysis, Faculty of Economics and Business Studies, Universidad de Zaragoza); José Julián Escario (Department of Economic Analysis, Faculty of Economics and Business Studies, Universidad de Zaragoza); José Alberto Molina (Department of Economic Analysis, Faculty of Economics and Business Studies, Universidad de Zaragoza)
    Abstract: We analyse whether there is a causal relationship between planning suicide and marijuana use among US youths. To that end, we specify a simultaneous probability model which is estimated by maximum likelihood using the YRBS (1999 and 2001). We place emphasis on a number of socio-demographic risk determinants (gender, age, ethnicity, environmental and peer group factors). Our results confirm that marijuana use and planning suicide are not the result of a single determinant, but rather emerge from a complex interaction of many socio-demographic factors. Moreover, they suggest the presence of reverse causality, with this implying that marijuana use increases the probability of planning suicide and, similarly, that youths who plan to commit suicide exhibit a higher probability of using marijuana.
    Keywords: Socio-Demographic determinants; Planning suicide; Marijuana use; Youths; Causality
    Date: 2013–03

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