nep-hea New Economics Papers
on Health Economics
Issue of 2013‒09‒28
twenty-one papers chosen by
Yong Yin
SUNY at Buffalo

  1. Labour-market database for South Africa with HIV/AIDS detail By Louise Roos
  2. Public and private hospitals, congestion, and redistribution By CANTA, Chiara; LEROUX, Marie-Louise
  3. Does quality affect patients’ choice of doctor? Evidence from the UK By Gravelle, Hugh S; Propper, Carol; Santos, Rita
  4. The Effects of Smoking Bans on Self-Assessed Health: Evidence from Germany By Daniel Kuehnle; Christoph Wunder
  5. Time Discounting, Present Biases, and Health-Related Behavior By Myong-Il Kang; Shinsuke Ikeda
  6. Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the UK By Dennis Guignet; Anna Alberini
  7. HIV Does Matter for Fertility: Human Capital, Mortality and Family Size By Günther Fink; Sebastian Linnemayr
  8. Why Does the Health of Immigrants Deteriorate? Evidence from Birth Records By Giuntella, Osea
  9. Economic Conditions at Birth, Birth Weight, Ability, and the Causal Path to Cardiovascular Mortality By van den Berg, Gerard J.; Modin, Bitte
  10. Healthy, wealthy, wise, and happy? An exploratory analysis of the interplay between aging and subjective well-being in low and middle income countries By Gabriela Flores; Michael Ingenhaag; Jürgen Maurer
  11. The Effect of Education on Health: Cross-Country Evidence By Raquel Fonseca; Yuhui Zheng
  12. Health Care Facility Choice and User Fee Abolition: Regression Discontinuity in a Multinomial Choice Setting By Steven F. Koch; Jeffrey S. Racine
  13. Hospital Choices, Hospital Prices and Financial Incentives to Physicians By Kate Ho; Ariel Pakes
  14. Average Marginal Labor Income Tax Rates under the Affordable Care Act By Casey B. Mulligan
  15. Heterogeneity in Long Term Health Outcomes of Migrants within Italy By Vincenzo Atella; Partha Deb
  16. The Impact of Mothers’ Earnings on Health Inputs and Infant Health By Naci Mocan; Christian Raschke; Bulent Unel
  17. Modeling Area-Level Health Rankings By Charles Courtemanche; Samir Soneji; Rusty Tchernis
  18. The Effect of Depression on Labor Market Outcomes By Lizhong Peng; Chad D. Meyerhoefer; Samuel H. Zuvekas
  19. Happy and healthy: a joint model of health and life satisfaction By Hernández-Alava, Mónica; Sampson, Christopher; Wailoo, Allan
  20. Primary Seat-Belt Laws and Driver Behavior: Evidence from Accident Data By Bae, Yong-Kyun
  21. Estimation of a physician practice cost function By Heimeshoff, Mareike; Schreyögg, Jonas

  1. By: Louise Roos
    Abstract: This paper describes the construction of a database that underlies the labour supply module developed for South Africa, with a specific focus on HIV/AIDS. The labour supply theory imposes a stock/flow dynamic mechanism on labour market groups distinguished by labour market activity, age, gender, race, and HIV status/stage. Broadly, the theory specifies that at the start of year t, people aged 15-65 (the working age population, hereafter the WAP) are divided into categories based on common characteristics. These characteristics are age, gender, race, HIV status/stage and labour-market activity undertaken in year t-1. People in categories offer their labour services to activities performed during year t. At the end of year t, people still part of the WAP progress one year in age and may change their HIV status/stage. Some people leave the WAP due to retirement or death. After this transition, people are again grouped into categories, based on common characteristics. The process of labour supply from a category to an activity is then repeated. For the implementation of this theory, we need to create a database that contains matrices that form the initial solution of the model. Three characteristics of this database are noted: (1) it contains detailed information regarding the structure of the WAP in the base year (2002); (2) it includes a transition matrix that allows adults to change their age and HIV stage between year t-1 and year t and (3) it includes matrices describing the flow of adults from categories to activities. This paper is organised in three parts. The first part describes the construction of the activities matrix in the base year. The activities matrix describes the number of people in each labour-market activity by age, gender, race and HIV stage. The second part of this paper explains the construction of the categories matrix and the flow matrices. The categories matrix shows the number of people in each labour-market activity by age, gender, race and HIV stage at the start of the year. The flow matrices show the number of people by age, gender, race and HIV stage, moving from a labour-market category to an activity. The third part of the paper describes the construction of the transition matrix. This matrix allows people in each labour-market activity, given their gender and race, to change their age from to and change their HIV stage from to .
    Keywords: Africa, HIV/AIDS
    JEL: I19 O55
    Date: 2013–05
  2. By: CANTA, Chiara (Université catholique de Louvain, Louvain School of Management and CORE, Belgium); LEROUX, Marie-Louise (Département des Sciences Economiques, UQAM, Canada; Université catholique de Louvain, CORE, Belgium)
    Abstract: This paper studies how congestion in the public health sector can be used as a redistributive tool. In our model, agents differ in income and they can obtain a health service either from a congested public hospital or from a non congested private one at a higher price. With pure in-kind redistribution, agents fail to internalize their impact on congestion, and the demand for the public hospital is higher than optimal. We show that under full information, the optimal redistribution and sorting across hospitals can be obtained using a lump-sum tax and a subsidy on the private hospital. If income is not observable but the social planner can assign agents across hospitals, the optimal congestion is higher than in the first best in order to relax incentive constraints. Finally, if agents can freely choose across hospitals, the optimal subsidy on the private hospital price may be negative or positive depending on the relative importance of redistribution and efficiency concerns.
    Keywords: optimal taxation, mixed health care systems, waiting times, income redistribution
    JEL: H21 H23 H44 I11
    Date: 2013–09–11
  3. By: Gravelle, Hugh S; Propper, Carol; Santos, Rita
    Abstract: Provider competition is a currently popular healthcare reform model. A necessary condition for greater competition to improve quality is that providers will face higher demand if they improve their quality. We test this crucial assumption in an important part of the health care market using data on the choices made by 3.4 million English patients from amongst nearly 1000 family doctor practices. We find that patients do respond to quality: a one standard deviation increase in a publicly available measure of clinical quality would increase the number of patients a practice would attract by around 15%.
    Keywords: choice; competition; demand; family practice; healthcare; Quality
    JEL: I11 I18
    Date: 2013–07
  4. By: Daniel Kuehnle; Christoph Wunder
    Abstract: The 16 German federal states introduced smoking bans on different dates during 2007 and 2008. These bans restricted smoking in enclosed public places, particularly in restaurants and bars. This study examines the effects of smoking bans on self-assessed health. Using data from the Socio-Economic Panel (SOEP), difference-in-differences estimations provide evidence for health improvements for the population at large. Health benefits from the secondhand smokefree environment are equivalent to an increase in household income of approximately 30%. Further subgroup analyses show that health improvements are largest among young non-smokers (below 30 years) whereas smokers report no or even adverse health effects in response to bans. Exploiting differences in the dates of introduction and enforcement, we find no evidence that the effects of bans depend on enforcement measures.
    Keywords: Smoking bans, self-assessed health, difference-in-differences
    JEL: D04 C23 I10
    Date: 2013
  5. By: Myong-Il Kang; Shinsuke Ikeda
    Abstract: Analysis of an original nationwide Internet survey reveals that health-related behavior shows associations with three aspects of time discounting: (i) impatience, measured by the overall discount rate; (ii) present bias, measured by the degree of declining impatience in the generalized hyperbolic discount function; and (iii) the sign effect, in that future losses are discounted at a lower rate than future gains. Present-biased respondents are classified as na?ve if the responses are indicative of being a time-inconsistent procrastinator, and classified as sophisticated otherwise. The health-related indicators that we examine relate to smoking, health condition, dentition status, and body habitus. We first show that a higher degree of impatience tends to worsen health-related attributes. Second, respondents with more steeply declining impatience tend to develop more unhealthy behavior and ill-health conditions, and the tendencies are likely to be stronger for na?fs than for sophisticates. Third, the sign effect, too, shows an association with health-related behavior, although the significance levels are not overly high. Consistent with these findings, the principal component of the health-related measures shows strong associations with the degrees of impatience and declining impatience.
    Date: 2013–09
  6. By: Dennis Guignet (National Center for Environmental Economics US Environmental Protection Agency); Anna Alberini (Department of Agricultural and Resource Economics University of Maryland, and Fondazione Eni Enrico Mattei, Venice)
    Abstract: Hedonic property value models are often used to place a value on localized amenities and disamenities. In practice, however, results may be affected by (i) omitted variable bias and (ii) whether homebuyers and sellers are aware of, and respond to, the assumed environmental measure. In this paper we undertake an alternative stated preference (SP) approach that eliminates the potential for unobserved confounders and where the measure of environmental quality is explicitly presented to respondents. We examine how homeowners in the United Kingdom and Italy value mortality risk reductions by asking them to choose among hypothetical variants of their home that differ in terms of mortality risks from air pollution and price. To our knowledge this is the first stated preference study examining respondents’ willingness to pay for properties using a quantitative and clearly specified measure of health risks. We find that Italian homeowners hold a value of a statistical life (VSL) of about €6.4 million, but UK homeowners tend to hold a much lower VSL (€2.1 million). This may be due to the fact that respondents in the UK do not perceive air pollution where they live to be as threatening, and actually live in cities with relatively low air pollution levels. Exploiting part of our experimental design, we find that Italian homeowners value a reduction in the risk of dying from cancer more than from other causes, but UK respondents do not hold such a premium. We also find that those who face higher baseline risks, due to higher air pollution levels where they live, hold a higher VSL, especially in the UK. In both countries, the VSL is twice as large among individuals who perceive air pollution where they live as relatively high.
    Keywords: Home Values, Air Pollution, Stated Preference, Vsl, Value of Statistical Life, Value of a Prevented Fatality, Health Risks, Cancer Premium
    Date: 2013–07
  7. By: Günther Fink (Harvard School of Public Health); Sebastian Linnemayr (Harvard School of Public Health)
    Abstract: In this paper we provide new evidence regarding the long-term impact of HIV on fertility and economic development. We develop a theoretical framework where parents optimally allocate their resources between child-rearing and consumption, and incorporate both infant and adult mortality in their fertility decision. The model predicts an ambiguous overall effect of HIV on fertility, but suggests that the optimal fertility adjustment to HIV is larger for more educated parents than for parents with little or no formal education. We test this prediction using a novel data set combining historical individual level data from World Fertility Surveys (WFS) with recent data from the Demographic and Health Surveys (DHS) including nationally representative HIV-testing. The result that more educated women reduce fertility more than uneducated mothers in the presence of HIV appears to hold both in the longitudinal and the cross-sectional analysis. Our results imply that HIV is unlikely to have a significant effect on population size, but will negatively affect countries’ long term economic prospects through an adverse shift in the population’s human capital composition.
    Keywords: HIV, Fertility, Mortality, Family Size, Economic Development
    Date: 2013–09
  8. By: Giuntella, Osea (University of Oxford)
    Abstract: Despite their lower socioeconomic status, Hispanic immigrants in the United States initially have better health outcomes than natives. Paradoxically while second-generation immigrants assimilate socio-economically, their health deteriorates. I show that a model of selection and intergenerational transmission of health reverses the apparent paradox, predicting a worse deterioration than the one observed in the data. While higher incidence of risk factors and acculturation are associated with poorer health, the “reverse paradox” is explained by the relative persistence in healthy behaviors among Hispanics. These effects hold true even in a subset of siblings, and holding constant grandmother-fixed effects.
    Keywords: birth outcomes, birthweight, intermarriage, risky behaviors, siblings, Latino paradox
    JEL: I10 J15
    Date: 2013–08
  9. By: van den Berg, Gerard J. (University of Mannheim); Modin, Bitte (Centre for Health Equity Studies - CHESS)
    Abstract: We analyze interaction effects of birth weight and the business cycle at birth on individual cardiovascular (CV) mortality later in life. In addition, we examine to what extent these long-run effects run by way of cognitive ability and education and to what extent those mitigate the long-run effects. We use individual records of Swedish birth cohorts from 1915–1929 covering birth weight, family characteristics, school grades, sibling identifiers, and outcomes later in life including the death cause. The birth weight distribution does not vary over the business cycle. The association between birth weight (across the full range) and CV mortality rate later in life is significantly stronger if the individual is born in a recession. This is not explained by differential fertility by social class over the cycle. Ability itself, as measured at age 10, varies with birth weight and the cycle at birth. But the long-run effects of early-life conditions appear to mostly reflect direct biological mechanisms. We do not find evidence of indirect pathways through ability or education, and the long-run effects are not mitigated by education.
    Keywords: longevity, genetic determinants, health, business cycle, life expectancy, cardiovascular disease, school grades, siblings, fetal programming, cause of death, life course, developmental origins, nature and nurture, cognitive ability, education, stratified partial likelihood, recession
    JEL: I10 I12 I21 I31 J10 J13 N34 C41 E32
    Date: 2013–08
  10. By: Gabriela Flores; Michael Ingenhaag; Jürgen Maurer
    Abstract: In this paper, we address the relationship between age and several dimension of subjective well-being. Whilst literature generally finds a U-shaped age-profile in subjective well-being, this age-pattern might only hold after controlling for objective life circumstances. The observed U-shaped age-profile might further not generalize to other dimensions of well-being and might vary across countries and cultures. Our study examines the relationship between age and several dimensions of well-being as well as the effect of objective life circumstances using the WHO Study on Global AGEing and Adult Health (SAGE). Our results suggest a decreasing age profile in the raw data associated with evaluative well-being, while experienced well-being shows a rather flat or slightly increasing pattern. However, age per se is not a cause of a decline in evaluative well-being. The negative age-profile in evaluative well-being is mainly explained by changes in life circumstances associated with aging. Controlling for socio-demographic factors, we find higher levels of well-being for older persons relative to their middle-aged counterparts. In contrast, we find that changes in life circumstances have a much smaller effect on experienced well-being.
    Keywords: Aging; Subjective Well-being; Low and middle income countries
    JEL: I31 J14
    Date: 2013–09
  11. By: Raquel Fonseca; Yuhui Zheng
    Abstract: This paper uses comparable micro-data from over 15 OECD countries to study the causal relationship between education and health outcomes. We combine three surveys (SHARE, HRS and ELSA) that include nationally representative samples of people aged 50 and over in these countries. We use variation in the timing of educational reforms across these countries as an instrument for the effect of education on health. Using instrumental variables Probit models (IV-Probit), we find causal evidence that more years of education lead to better health for a limited number of health markers. We find lower probabilities of reporting poor health, of having limitations in functional status (ADLs and iADLs) and of having been diagnosed with diabetes. These effects are larger than those from a Probit that does not control for the endogeneity of education. We cannot find evidence of a causal effect of education on other health conditions. Interestingly, the relationship between education and cancer is positive in both Probit and IV-Probit models, which we interpret as evidence that education fosters early detection.
    Keywords: Education, health, causality, compulsory schooling laws
    JEL: I1 I14 I2
    Date: 2013
  12. By: Steven F. Koch; Jeffrey S. Racine
    Abstract: We apply parametric and nonparametric regression discontinuity methodology within a multinomial choice setting to examine the impact of public health care user fee abolition on health facility choice using data from South Africa. The nonparametric model is found to outperform the parametric model both in- and out-of-sample, while also delivering more plausible estimates of the impact of user fee abolition (i.e. the 'treatment effect'). In the parametric framework, treatment effects were relatively constant - around 7% - and that increase was drawn equally from both home care and private care groups. On the other hand, in the nonparametric framework treatment effects were largest for the least well-off (also around 7%) but fell for the most well-off. More plausibly, that increase was drawn primarily from the home care group, suggesting that the policy favoured those least well-off as more of these children received at least some minimum level of professional health care after the policy was implemented. Regarding the most well-off, despite having access to free public health care, children were still far more likely to receive health care at private facilities than at public facilities, which is also more plausible in South Africa's two-tier health sector.
    Date: 2013–09
  13. By: Kate Ho; Ariel Pakes
    Abstract: We estimate a preference function which rationalizes hospital referrals for privately-insured birth episodes in California. The function varies across insurers and is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan and severity-specific hospital fixed effects (capturing various dimensions of hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The inequality estimator indicates that insurers with more capitated physicians are more responsive to hospital prices. Capitated plans are willing to send patients further to utilize similar-quality lower-priced hospitals; but the trade-off between quality and costs does not vary with capitation rates.
    JEL: I11 L1
    Date: 2013–08
  14. By: Casey B. Mulligan
    Abstract: The Affordable Care Act includes four significant, permanent, implicit unemployment assistance programs, plus various implicit subsidies for underemployment. Every sector of the economy, and about half of nonelderly adults, is directly affected by at least one of those provisions. This paper calculates the ACA’s impact on the average reward to working among nonelderly household heads and spouses. The law increases marginal tax rates by an average of five percentage points (of employee compensation), on top of the marginal tax rates that were already present before the it went into effect. The ACA’s addition to labor tax wedges is roughly equivalent to doubling both employer and employee payroll tax rates for half of the population.
    JEL: E24 H31 I18 I38
    Date: 2013–08
  15. By: Vincenzo Atella; Partha Deb
    Abstract: This article examines the long term physical and mental health effects of internal migration focusing on a relatively unique migration experience from Southern and Northeastern regions of Italy to Northwestern regions and to the region around Rome concentrated over a relatively short period from 1950-1970. OLS regression estimates show significant evidence of a migration effect among early-cohort females on physical health. We find no evidence of migration-health effects for the later cohort, nor for males in the early cohort. We use finite mixture models to further explore the possibility of heterogeneous effects and find that there is a significant and substantial improvement in physical and mental health for a fraction of migrant females in the early cohort but not for others. Analysis of the group for which effects are significant suggest that health effects are concentrated among rural females in the early cohort.
    JEL: C21 I15
    Date: 2013–09
  16. By: Naci Mocan; Christian Raschke; Bulent Unel
    Abstract: This paper investigates the impact of mothers’ earnings on birth weight and gestational age of infants. It also analyzes the impact of earnings on mothers’ consumption of prenatal medical care, and their propensity to smoke and drink during pregnancy. The paper uses census-division- and year-specific skill-biased technology shocks as an instrument for mothers’ earnings and employs a two-sample instrumental variables strategy. About 14 million records of births between 1989 and 2004 are used from the Natality Detail files along with the CPS Annual Demographic Files from the same period. The results reveal that an increase in weekly earnings prompts an increase in prenatal care of low-skill mothers (those who have at most a high school degree) who are not likely to be on Medicaid, and that earnings have a small positive impact on birth weight and gestational age of the newborns of these mothers. An increase in earnings does not influence the health of newborns of high-skill mothers (those with at least some college education). Variations in earnings have no impact on birth weight for mothers who are likely to be on Medicaid.
    JEL: I10 I12 J31
    Date: 2013–09
  17. By: Charles Courtemanche; Samir Soneji; Rusty Tchernis
    Abstract: We propose a Bayesian factor analysis model to rank the health of localities. Mortality and morbidity variables empirically contribute to the resulting rank, and population and spatial correlation are incorporated into a measure of uncertainty. We use county-level data from Texas and Wisconsin to compare our approach to conventional rankings that assign deterministic factor weights and ignore uncertainty. Greater discrepancies in rankings emerge for Texas than Wisconsin since the differences between the empirically-derived and deterministic weights are more substantial. Uncertainty is evident in both states but becomes especially large in Texas after incorporating noise from imputing its considerable missing data.
    JEL: C11 I14
    Date: 2013–09
  18. By: Lizhong Peng; Chad D. Meyerhoefer; Samuel H. Zuvekas
    Abstract: We estimated the effect of depression on labor market outcomes using data from the 2004-2009 Medical Expenditure Panel Survey. After accounting for the endogeneity of depression through a correlated random effects panel data specification, we found that depression reduces the likelihood of employment. We did not, however, find evidence of a causal relationship between depression and hourly wages or weekly hours worked. Our estimates are substantially smaller than those from previous studies, and imply that depression reduces the probability of employment by 2.6 percentage points. In addition, we examined the effect of depression on work impairment and found that depression increases annual work loss days by about 1.4 days (33 percent), which implies that the annual aggregate productivity loses due to depression-induced absenteeism range from $700 million to 1.4 billion in 2009 USD.
    JEL: C23 I10 J22
    Date: 2013–09
  19. By: Hernández-Alava, Mónica; Sampson, Christopher; Wailoo, Allan
    Abstract: Subjective well-being has been proposed as an alternative to preference based values of health benefit for use in economic evaluation. We develop a latent factor model of health and well-being in order to compare reported satisfaction with life, satisfaction with health and SF-6D responses. This approach provides a coherent, integrated statistical framework for assessing differences between these outcomes on the same scale. Using panel data from the British Household Panel Survey we find that SF-6D and satisfaction with health are influenced to a similar degree by changes in latent health and satisfaction with life is less responsive. For the average individual, there are no substantial differences in the relative impacts of physical versus mental health conditions between the three measures. These findings suggest that the differences between experienced and hypothetical values of health and life satisfaction may not lead to substantial differences in the assessment of value from health technologies.
    Keywords: satisfaction with life; SF-6D, preferences; quality-adjusted life years
    JEL: I10 I31
    Date: 2013–09–06
  20. By: Bae, Yong-Kyun
    Abstract: This paper investigates the offsetting effect theory, using individual-level accident data to analyze how drivers respond to seat-belt laws. I find that drivers drive their vehicles more carefully when more stringent seat-belt laws are in effect. I also find that careful driving is not associated with pedestrian involvement in accidents. Using synthetic panel data, I find that the change in the laws results in an increased number of careful drivers and a decreased number of careless drivers in accidents. The results show that the offsetting effects are weaker than expected or may not exist in accidents.
    Keywords: Offsetting Behavior, Safety Regulation, Seat Belt Laws, Vehicle Accidents
    JEL: D01 L51 L91
    Date: 2013–09–14
  21. By: Heimeshoff, Mareike; Schreyögg, Jonas
    Abstract: This is the first study to specify a physician practice cost function with practice costs as the unit of analysis. Our study is based on the data of 3,706 physician practices for the years 2006 to 2008. We propose a model using physician practices as the unit of observation and considering the endogenous character of physician input. In doing so, we apply a translog functional form and include a comprehensive set of variables that have not been previously used in this context. A system of four equations using three-stage least squares is estimated. We find that a higher degree of specialisation and participation in disease management programs and gatekeeper models leads to a decrease in costs, whereas quality certification increases costs. Costs increase with the number of physicians, most likely because of the existence of indivisibilities of expensive technical equipment. Smaller practices might not reach the critical mass to invest in certain technologies, which leads to differences in the type of health care services provided by different practice types. --
    Keywords: physician practice cost function,three-stage least squares,specialization,economies of scale
    Date: 2013

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