nep-hea New Economics Papers
on Health Economics
Issue of 2013‒11‒02
twenty-six papers chosen by
Yong Yin
SUNY at Buffalo

  1. Epidemics in markets with trade friction and imperfect transactions By Mathieu Moslonka-Lefebvre; Herv\'e Monod; Christopher A. Gilligan; Elisabeta Vergu; Jo\~ao A. N. Filipe
  2. Uncertain altruism and the provision of long term care By CREMER, Helmuth; gahvari, Firouz; PESTIEAU, Pierre
  3. Self-assessed health of elderly people in Brussels: does the built environment matter? By DUJARDIN, Claire; lorant, VINCENT; THOMAS, Isabelle
  4. Fair retirement under risky lifetime By FLEURBAEY, Marc; LEROUX, Marie-Louise; PESTIEAU, Pierre; PONTHIERE, Grégory
  5. Endogenous Health in a Model of Calories, Medical Services and Health Shocks By Pedro Gomis Porqueras; Solmaz Moslehi; Richard M. H. Suen
  6. Infectious Diseases and Economic Growth By Aditya Goenkay; Lin Liu; Manh-Hung Nguyen
  7. Behind-the-counter, but Over-the-border? The Assessment of the Geographical Spillover Effect of Increased Access to Emergency Contraception By Inna Cintina
  8. Measurement and Determinants of Health Poverty and Richness – Evidence from Portugal By Nádia Simões; Nuno Crespo; Sandrina B. Moreira; Celeste A. Varum
  9. Leasing health technologies- an affordable and effective reimbursement strategy for innovative technologies? By Christopher McCabe; Richard Edlin; Peter Hall; Klemens Wallner
  10. Methods for Identifying the Cost-effective Case Definition Cut-off for Sequential Monitoring Tests: an Extension of Phelps and Mushlin By Christopher McCabe; Paul Baxter; Roberta Longo; Peter Hall; Jenny Hewison; Mehran Afshar; Geoff Hall
  11. Assignment errors and the valuation of EQ-5D health states-do responses mean what we think they mean? By Richard Edlin; Christopher McCabe; David Meads
  12. Nannying, nudging, rewarding? A discussion on the constraints and the degree of control over health status By Christine le Clainche; Sandy Tubeuf
  13. Health inefficiency and unobservable heterogeneity - empirical evidence from pathology services in the UK National Health Service By John Buckell; Andrew Smith; Roberta Longo; David Holland
  14. Use of Bayesian Markov Chain Monte Carlo Methods to Estimate EQ-5D Utility Scores from Eortic QLQ Data in Myeloma for Use in Cost effectiveness Analysis By Samer A Kharroubi; Richard Edlin; David Meads; Chantelle Browne; Julia Brown; Christopher McCabe
  15. The Role of Retiree Health Insurance in the Early Retirement of Public Sector Employees By John B. Shoven; Sita Slavov
  16. The Effects of Retiree Health Insurance Plan Characteristics on Retirees’ Choice and Employers’ Costs By Robert Clark; Melinda Morrill; David Vanderweide
  17. What Do We Know About Short and Long Term Effects of Early Life Exposure to Pollution? By Janet Currie; Joshua S. Graff Zivin; Jamie Mullins; Matthew J. Neidell
  18. Who Pays for Public Employee Health Costs? By Jeffrey Clemens; David M. Cutler
  19. Regulation and Capacity Competition in Health Care: Evidence from Dialysis Markets By Mian Dai; Xun Tang
  20. Does Physician Compensation Impact Procedure Choice and Patient Health? By Diane Alexander
  21. Effects of Mental Health on Couple Relationship Status By Nancy E. Reichman; Hope Corman; Kelly Noonan
  22. Multiracial infants and low birth weight: Evidence from the Fragile Families and Child Wellbeing Study By Kate H. Choi; Sara S. McLanahan
  23. How much international variation in child height can sanitation explain? By Dean Spears
  24. The health care system reform in China: effects on out-of-pocket expenses and saving By Vincenzo Atella; Agar Brugiavini; Noemi Pace
  25. Can Fat Taxes and Package Size Restrictions Stimulate Healthy Food Choices? By E. HUYGHE; A. VAN KERCKHOVE
  26. The effects of local fiscal policy on firm profitability in the Flemish hospitality industry By S. DE SCHOENMAKER; P. VAN CAUWENBERGE; H. VANDER BAUWHEDE

  1. By: Mathieu Moslonka-Lefebvre; Herv\'e Monod; Christopher A. Gilligan; Elisabeta Vergu; Jo\~ao A. N. Filipe
    Abstract: Market trade-routes can support infectious-disease transmission, impacting biological populations and even disrupting causal trade. Epidemiological models increasingly account for reductions in infectious contact, such as risk-aversion behaviour in response to pathogen outbreaks. However, market dynamics clearly differ from simple risk-aversion, as are driven by different motivation and conditioned by trade constraints, known in economics as friction, that arise because exchanges are costly. Here we develop a novel economic-market model where transient and long-term market dynamics are determined by trade friction and agent adaptation, and can influence disease transmission. We specify the participants, frequency, volume, and price in trade transactions, and investigate, using analytical insights and simulation, how trade friction affects joint market and epidemiological dynamics. The friction values explored encompass estimates from French cattle and pig markets. We show that, when trade is the dominant route of transmission, market friction can be a significantly stronger determinant of epidemics than risk-aversion behaviour. In particular, there is a critical friction level above which epidemics do not occur. For a given level of friction, open unregulated markets can boost epidemics compared with closed or tightly regulated markets. Our results are robust to model specificities and can hold in the presence of non-trade disease-transmission routes. In particular, we try to explain why outbreaks in French livestock markets appear more frequently in cattle than swine despite swine trade-flow being larger. To minimize contagion in markets, safety policies could generate incentives for larger-volume, less-frequent transactions, increasing trade friction without necessarily affecting overall trade flow.
    Date: 2013–10
  2. By: CREMER, Helmuth (Toulouse School of Economics, France); gahvari, Firouz (Department of Economics, University of Illinois, USA); PESTIEAU, Pierre (CREPP, Université de Liège; Université catholique de Louvain, CORE, Belgium; Toulouse School of Economics, France)
    Abstract: This paper studies the role of private and public long term care (LTC) insurance programs in a world in which family assistance is uncertain. Benefits are paid in case of disability but cannot be conditioned (directly), due to moral hazard problems, on family aid. Under a topping up scheme, when the probability of altruism is high, there is no need for insurance. At lower probabilities, insurance is required, thought not full insurance. This can be provided either privately or publicly if insurance premiums are fair, and publicly otherwise. Moreover, the amount of LTC insurance varies negatively with the probability of altruism. With an opting out scheme, there will be three possible equilibria depending on the children’s degree of altruism being “low,” “moderate,” or “very high”. These imply: full LTC insurance with no aid from children, less than full insurance just enough to induce aid, and full insurance with aid. Fair private insurance markets can support the first equilibrium, but not the other two equilibria. Only a public opting-out scheme can attain them by creating incentives for self-targeting and ensuring that only dependent parents who are not helped by their children seek help from the government.
    Keywords: long term care, uncertain altruism, private insurance, public insurance, topping up, opting out
    JEL: H2 H5
    Date: 2013–09–23
  3. By: DUJARDIN, Claire (Université catholique de Louvain, CORE, Belgium and Institut Wallon d’Evaluation, de Prospective et de Statistiques (IWEPS), Namur, Belgium); lorant, VINCENT (Université catholique de Louvain, Institute of Health and Society, Belgium); THOMAS, Isabelle (FRS-FNRS and Université catholique de Louvain, CORE, Belgium)
    Abstract: The built environment plays a key role in the strategy of “Aging in Place”. Here, we study the influence of the built environment on the health status of elderly people living in Brussels. Using census and geocoded data, we analysed if built environment factors were associated with poor self- assessed health status and functional limitations of elderly aged 65+. We concluded that the evidence of the built-environment hypothesis is weak and vulnerable to the composition of the neighborhood.
    Keywords: built urban environment, subjective health, elderly, GIS-based measures, logistic regressions, Brussels
    JEL: I10 I14 R23
    Date: 2013–09–23
  4. By: FLEURBAEY, Marc (Princeton University); LEROUX, Marie-Louise (Départment des Sc. Economiques, ESG-Université du Québec à Montréal (UQAM), CIRPEE, Canada; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); PESTIEAU, Pierre (University of Liège; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; Paris School of Economics and CEPR); PONTHIERE, Grégory (Paris School of Economics and Ecole Normale Supérieure, Paris)
    Abstract: A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime, and compare the laissez-faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare (ex ante), allowing for a compensation for unequal life expectancies; (2) the maximin on realized lifetime welfare (ex post), allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles, as well as raising the retirement age, unlike the ex ante egalitarian optimum. This result is robust to the introduction of unequal life expectancies and unequal productivities. Hence, the postponement of the retirement age can, quite surprisingly, be defended on egalitarian grounds - although the conclusion is reversed when mortality strikes only after retirement.
    Keywords: risky lifetime, mortality, labour supply, retirement, compensation
    JEL: I14 I18 J10 J22
    Date: 2013–09–23
  5. By: Pedro Gomis Porqueras; Solmaz Moslehi; Richard M. H. Suen
    Abstract: This paper presents a theoretical framework that incorporates both preventive actions and treatment opportunities to study health outcomes. In particular, we allow for an agent's eating decision to alter the distribution of future health shocks. Once a shock is realized medical care can be used to improve her health. Thus, choosing a healthier diet is a form of self-protection while medical expenditures are a form of self-insurance. The model helps rationalize why agents choose to be overweight even though they are fully aware of its adverse health consequences. Moreover, this framework predicts that wealthier individuals, on average, have lower morbidity rates and lead a healthier lifestyle. Finally, our numerical exercise captures U.S. cross-sectional facts regarding the choice of diet, medical expenditures as well as health and non-food expenditures.
    Keywords: Calories, Medical Care, Health Shock.
    JEL: D81 I12 J11
    Date: 2013–10–25
  6. By: Aditya Goenkay (Department of Economics, National University of Singapore, AS2, Level 6, 1 Arts Link, Singapore 117570); Lin Liu (Department of Economics, Harkness Hall, University of Rochester, Rochester, NY 14627, USA); Manh-Hung Nguyen (LERNA-INRA, Toulouse School of Economics, Manufacture des Tabacs, 21 All¶ee de Brienne, 31000 Toulouse, France)
    Abstract: This paper develops a framework to study the economic impact of infectious diseases by integrating epidemiological dynamics into a continuous time neo-classical growth model. There is a two way interaction between the economy and the disease: the incidence of the disease affects labor supply and investment in health capital can affect the incidence and recuperation from the disease. Thus, both the disease incidence and the income levels are endogenous. It is a general framework to study the effect and control of infectious diseases where there is an interaction with physical capital and health expenditures. The dynamics of the disease make the control problem non-convex and thus, a new existence theorem is given. We fully characterize the local dynamics of the model. There can be multiple steady states, and as the underlying parameters change there can be bifurcations. There can also be steady states where the disease is endemic but the optimal response is not to spend any resources on controlling it. We also see how the endogenous variables change as some underlying economic parameters are varied.
    Keywords: Epidemiology; Infectious Disease; Bifurcation; Existence of equilibrium
    JEL: C61 D51 E13 O41 E32
    Date: 2013
  7. By: Inna Cintina (UHERO, University of Hawaii at Manoa)
    Abstract: Washington was the first state to ease the prescription requirements making emergency contraception (EC) available behind-the-counter at pharmacies to women of any age in 1998. I hypothesize that the increased availability of EC affects fertility rates beyond the borders of the state that allows it. In contrast to the literature, I show that increased access to EC is associated with a statistically significant albeit economically small decrease in abortion rates in Washington counties where women had access to no-prescription EC pharmacies. Yet, there is no effect on pregnancy rates. These results are robust in a number of specifications. Finally, I find some evidence in support of the spillover effects in Idaho, but not Oregon. However, after accounting for changes in the availability of abortion services, the decrease in fertility rates in "treated" Idaho counties is rather small and models lack sufficient power to detect it.
    Keywords: Emergency contraception; Plan B; Abortion; Pregnancy; Border-hopping; Travel distance
    JEL: I1 I18 J13
    Date: 2013–05
  8. By: Nádia Simões; Nuno Crespo; Sandrina B. Moreira; Celeste A. Varum
    Abstract: The analysis of health inequalities is a critical topic for health policy. With data for Portugal, we propose a procedure to convert information provided by the official National Health Survey to EuroQol. Based on these data, we make two contributions. First, we extend measures and methods commonly applied in other fields of economic research in order to quantify the phenomena of health poverty, richness, and inequality. Second, using an ordered probit model, we evaluate the determinants of health inequalities in Portugal. The results show that there is a remarkable level of health inequality, with significant rates of poverty (11.64%) and richness (22.64%). The econometric study reveals that gender, age, education, region of residence, and eating habits are among the most critical determinant factors of health.
    Keywords: health poverty, health richness, inequality, Portugal, EuroQol, determinant factors
    JEL: I14 I32
    Date: 2013–10–28
  9. By: Christopher McCabe (Department of Emergency Medicine, School of Community Medicine, University of Alberta, Edmonton, Canada); Richard Edlin (Health Systems, School of Population Health, University of Auckland, New Zealand); Peter Hall (Academic Unit of Health Economics, LIHS, University of Leeds); Klemens Wallner (Department of Emergency Medicine, School of Community Medicine, University of Alberta, Edmonton, Canada)
    Abstract: The challenge of implementing high cost innovative technologies in health care systems operating under significant budgetary pressure has seen a radical shift in the health technology reimbursement landscape. New reimbursement strategies attempt to reduce the risk of making the wrong decision; i.e. paying for a technology that is not good value for the health care system, whilst promoting the adoption of innovative technologies into clinical practice. However, the remaining risk is not shared between the manufacturer and the health care payer at the individual purchase level; it continues to be passed from the manufacturer to the payer at the time of purchase. In this paper we propose a health technology payment strategy – Technology Leasing Reimbursement Scheme (TLRS) - which allows the sharing of risk between the manufacturer and the payer; the replacing of upfront payments with a stream of payments spread over the expected duration benefit from the technology, subject to the technology delivering the claimed health benefit. Using trastuzumab (Herceptin) in Early Breast Cancer as an exemplar technology we show how a TLRS not only reduces the total budgetary impact of the innovative technology, it also truly shares risk between the manufacturer and the health care system, whilst reducing the value of further research and thus promoting the rapid adoption of innovative technologies into clinical practice.
    Date: 2013
  10. By: Christopher McCabe (Department of Emergency Medicine, University of Alberta, Canada); Paul Baxter (Centre for Epidemiology & Biostatistics, University of Leeds); Roberta Longo (Leeds Institute of Health Sciences, University of Leeds); Peter Hall (Leeds Institute of Health Sciences, University of Leeds); Jenny Hewison (Leeds Institute of Health Sciences, University of Leeds); Mehran Afshar (Leeds Teaching Hospitals Trust, Leeds); Geoff Hall (Leeds Teaching Hospitals Trust, Leeds)
    Abstract: The arrival of personalized medicine in the clinic means that treatment decisions will increasingly rely on test results. The challenge of limited health care resources means that the dissemination of these technologies will be dependent on their value in relation to their cost; i.e. their cost effectiveness. Phelps and Mushlin have described how to optimize tests to meet cost effectiveness target. However, when tests are applied repeatedly the case mix of the patients tested changes with each administration, and this impacts upon the value of each subsequent test administration. In this paper we present a modification of Phelps and Mushlin’s framework for diagnostic tests; to identify the cost effective cut-off for monitoring tests. Using the use of Ca125 test monitoring for relapse in Ovarian Cancer, we show how the repeated use of the diagnostic cut-off can lead to a substantially increased false negative rate compared to the monitoring cut-off – over 20% higher than in this example – with the associated harms for individual and population health.
    Date: 2013
  11. By: Richard Edlin (Health Systems, School of Population Health, University of Auckland); Christopher McCabe (School of Community Medicine, University of Alberta, Edmonton, Canada); David Meads (Academic Unit of Health Economics, LIHS, University of Leeds)
    Abstract: Cost-utility analysis is used within the health technology assessment processes of many countries. For these analyses, patients typically indicate the health state that they are in based on a pre-defined descriptive classification. Each health state corresponds to a utility value; these values are obtained from members of the general public who are asked what they would be willing to give up to avoid spending time in that health state. If people struggle to do this, they might imagine (and so value) different states to those they are prompted with. Here, they assign a different meaning to the prompt than intended, which we designate as an ‘assignment error’. This paper formally defines these errors for the EQ-5D-3L and explores MVH dataset used to construct the UK EQ-5D-3L tariff. We modify the regressions used to form this tariff to include potential assignment errors and find that these errors are significant predictors in the regressions. For some states, there is evidence that over half the respondents answering valuation questions may make an assignment error. As these errors will affect some states more than others, they are a potential source of bias and hence distortion in resource allocation. The size of this distortion is explored in the UK context using the regressions identified by this paper, all of which suggest that less weight be given to curing moderate illness and more weight be given to curing more severe illness.
    Keywords: quality-adjusted life years, health related quality of life, assignment errors, estimation
    JEL: I1 I31
    Date: 2013
  12. By: Christine le Clainche (CEE, Economics Department, Paris); Sandy Tubeuf (Academic Unit of Health Economics (University of Leeds),)
    Abstract: Public health policies typically assume that there are characteristics and constraints over health that an individual cannot control and that there are choices that an individual could change if he is nudged or provided with incentives. We consider that health is determined by a range of personal, social, economic and environmental factors and we discuss to what extent an individual can control those factors. In particular, we assume that observed health status is the result of individual control and constraints to change that an individual faces. We suggest three different constraints: budget, time and psychological constraints and position various determinants of health according to increasing levels of constraint and increasing degrees of individual control. We finally discuss public health policies such as nannying, nudging, and rewarding within this new framework and show that the level of constraints and the degree of individual control over health status are essential dimensions to consider when designing and implementing public health policies.
    Keywords: health determinants, equality of opportunity, individual agency, health public policy
    JEL: I1 I18 I12 D01 D63
    Date: 2013
  13. By: John Buckell (Academic Unit of Health Economics, University of Leeds); Andrew Smith (Institute for Transport Studies, University of Leeds); Roberta Longo (Academic Unit of Health Economics, University of Leeds); David Holland (Keele Benchmarking Unit, Keele University)
    Abstract: Pathology services are increasingly recognised as key to effective healthcare delivery - underpinning diagnosis, long-term disease management and research. To the extent that pathology services affect a patient’s treatment pathway, significant healthcare costs are influenced directly by the performance of these services. Pathology is thus closely tied to a multiplicity of other healthcare services, meaning that inefficient practice here can reverberate throughout the healthcare system. Given pressures on the UK Department of Health to make efficiency savings and that little is known about the efficiency of pathology laboratories, this area offers unlocked potential for timely efficiency gains. We measure inefficiency to identify potential efficiency savings available in these services. Inefficiency is measured by applying Stochastic Frontiers to a panel of 57 laboratories over a five year period. Panel data techniques can account for unobservable heterogeneity and we use a series of statistical tests to decide between models. In addition, we report the impacts of the determinants of laboratory costs, thus providing useful information to policy makers. We find 15% potential efficiency savings in pathology services in this sample, which implies £450m in monetary terms in pathology across the NHS.
    Date: 2013
  14. By: Samer A Kharroubi (Department of Mathematics, University of York, York); Richard Edlin (School of Population Health, University of Auckland); David Meads (Academic Unit of Health Economics, University of Leeds, Leeds); Chantelle Browne (Academic Unit of Health Economics, University of Leeds, Leeds); Julia Brown (Clinical Trials Research Unit, University of Leeds, Leeds); Christopher McCabe (Department of Emergency Medicine, School of Community Based Medicine, University of Alberta, Edmonton (Canada))
    Abstract: Background: Patient Reported Outcome Measures are an important component of the evidence for health technology appraisal. Their incorporation into cost effectiveness analyses (CEA) requires conversion of descriptive information into utilities. This can be done using bespoke utility algorithms. Otherwise, investigators will often estimate indirect utility models for the PROMS using off-the-shelf utility data such as the EQ-5D or SF-6D. Many different modeling strategies are reported in the literature; however, to date there has been limited utilization of Bayesian methods in this context. In this paper we use a large trial dataset containing the EORTC QLQ-C30 with MY20 and the EQ-5D to examine the relative advantage of the Bayesian methods in relation to dealing with missing data, relaxing the assumption of equal variances and characterizing the uncertainty in the model predictions. Methods: Data from a large myeloma trial were used to examine the relationship between scores in each of the 19 domains of the EORTC QLQ-C30/QLQ-MY20 and the EQ-5D utility. Data from 1839 patients was divided 75%/25% between derivation and validation sets. A conventional OLS model, assuming equal variance and a Bayesian model allowing unequal variance were estimated on complete cases. Two further models were estimated using conventional and Bayesian multiple imputation respectively, using the full dataset. Models were compared in terms of data fit, accuracy in model prediction and characterization of uncertainty in model predictions. Conclusions: Mean EQ-5D utility weights can be estimated from the EORTC QLQ-C30/QLQMY20 for use in CEA. Frequentist and Bayesian methods produced effectively identical models. However, the Bayesian models provide distributions describing the uncertainty surrounding the estimated utility values and are thus more suited informing analyses for probabilistic CEA.
    Keywords: Bayesian methods, EQ-5D, Multiple Myeloma, Quality of Life, mapping, Cost-utility analysis, regression modelling.
    JEL: I1
    Date: 2013
  15. By: John B. Shoven; Sita Slavov
    Abstract: Most private sector workers with employer-provided health insurance have a strong incentive to continue working until Medicare eligibility in order to maintain group health coverage. However, most government employees have access to retiree health coverage, which allows them access to group health coverage even if they retire before Medicare eligibility. We study the impact of retiree health coverage on the probability of stopping work among public sector workers between the ages of 55 and 64. We find that, for state and local government employees, retiree health coverage raises the probability of stopping work by 5.1 percentage points (around 28 percent) between ages 60 and 64. However, we find no evidence that retiree health coverage influences state and local employees’ decisions to stop work at ages 55-59, or that such coverage has an effect on the probability of stopping work for federal and military employees.
    JEL: I1 J2 J3 J4
    Date: 2013–10
  16. By: Robert Clark; Melinda Morrill; David Vanderweide
    Abstract: To moderate the rate of growth of retiree health insurance costs, employers can modify plans and move retirees into less expensive plans. We examine policy modifications implemented by the North Carolina State Health Plan. We investigate whether incentives produce the desired plan elections and whether these changes, along with cost shifting, produce the expected reductions in cost growth. Using individual-level administrative data, along with aggregated data on expenditures for retirees, we estimate the effects of the introduction and subsequent repeal of a Comprehensive Wellness Initiative for non-Medicare eligible retirees, as well as increases in coinsurance and copayments and the introduction of a premium for all retirees. Over a third of non-Medicare retirees shifted into the least generous plan between June 2009 and December 2012. The level effects on annual costs and unfunded accrued liabilities were relatively modest, but growth rates were diminished. Increases in the retiree premiums reduced projected costs.
    JEL: H75 I13 J32
    Date: 2013–10
  17. By: Janet Currie; Joshua S. Graff Zivin; Jamie Mullins; Matthew J. Neidell
    Abstract: Pollution exposure early in life is detrimental to near-term health and an increasing body of evidence suggests that early childhood health influences health and human capital outcomes later in life. This paper reviews the economic research that brings these two literatures together. We begin with a conceptual model that highlights the core relationships across the lifecycle. We then review the literature concerned with such estimates, focusing particularly on identification strategies to mitigate concerns regarding endogenous exposure. The nascent empirical literature provides both direct and indirect evidence that early childhood exposure to pollution significantly impacts later life outcomes. We discuss the potential policy implications of these long-lasting effects, and conclude with a number of promising avenues for future research.
    JEL: I1 I12 J24 Q5 Q53
    Date: 2013–10
  18. By: Jeffrey Clemens; David M. Cutler
    Abstract: We analyze the incidence of public-employee health benefits. Because these benefits are negotiated through the political process, relevant labor market institutions deviate significantly from the competitive, private-sector benchmark. Empirically, we find that roughly 15 percent of the cost of recent benefit growth was passed onto school district employees through reductions in wages and salaries. Strong teachers’ unions were associated with relatively strong linkages between benefit growth and growth in total compensation. We further find that when economic conditions are poor, straining public budgets, benefit growth is more readily shifted back to public employees. Our analysis is consistent with the view that the costs of public workers’ benefits are difficult to monitor, contributing to benefit oriented, and often under-funded, compensation schemes.
    JEL: H22 H74 H75 I13
    Date: 2013–10
  19. By: Mian Dai (Department of Economics, Drexel University); Xun Tang (Department of Economics, University of Pennsylvania)
    Abstract: This paper studies entry and capacity decisions by dialysis providers in the U.S. We estimate a structural model where providers make strategic continuous choices of capacities based on private information about own costs and beliefs about competitors’ behaviors. We evaluate the impact on market structure and provider profits under counterfactual regulatory policies that increase per capacity cost or reduce per capacity payment. We find that these policies reduce the market capacity of dialysis stations. However, the downward sloping reaction curve shields some providers from negative profit shocks in certain markets. The paper also has a methodological contribution in that it proposes new estimators for Bayesian games with continuous actions, which differ qualitative from discrete Bayesian games such as those with binary entry decisions.
    Keywords: Bayesian Games with Continuous Actions, U.S. Dialysis Market
    JEL: L11 L13 I11
    Date: 2013–06–28
  20. By: Diane Alexander (Princeton University)
    Abstract: I find that compensation structure impacts a doctor’s decision to perform a Cesarean section (C-section). Using Medicaid reimbursement and vital statistics data, I find that fee-for-service doctors respond to an increase in the relative reimbursement for C-sections by increasing their use of the procedure. These incentives are not passed through to salaried doctors – their Csection use remains constant at the same lower rate as fee-for-service doctors who are paid the same for both procedures. For fee-for-service doctors who face pay differentials, however, the increase in C-section use due to increases in the pay difference is associated with fewer infant deaths. Thus, this paper demonstrates the difficulty in lowering procedure use while holding patient health constant; from a policy perspective, the consequences for patients of changing physician behavior must always be kept in mind.
    Keywords: Medicaid, health costs, c-section, cesarean section, births, reimbursement, compensation, doctors
    JEL: I I I
    Date: 2013–07
  21. By: Nancy E. Reichman (Robert Wood Johnson Medical School & Princeton University); Hope Corman (Rider University & NBER); Kelly Noonan (Rider University & NBER)
    Abstract: We exploit the occurrence of postpartum depression (PPD), which has a random component according to the medical community, to estimate causal effects of a salient form of mental illness on couples’ relationship status. We estimate single-equation models as well as bivariate probit models that address the endogeneity of PPD. We find that this relatively prevalent mental illness reduces the probability the couples are married (by 22–24%) as well the probability that they are living together (married or cohabiting) (by 24–26%) three years after the birth of the child. Models stratified by relationship status at the time of the birth indicate that PPD makes it more likely that unions dissolve (particularly among baseline cohabitors) and less likely that unions are formed (particularly among baseline non-cohabitors). The findings contribute to the literature on the effects of mental illness on relationships and to the broader literature on socioeconomic status and health.
    Keywords: postpartum depression, motherhood, families, mental illness, relationship status
    JEL: D19 D63 J12 J13 I19
    Date: 2013–06
  22. By: Kate H. Choi (University of Western Ontario); Sara S. McLanahan (Princeton University)
    Abstract: Using data from the Fragile Families and Child Wellbeing Study, we examine how the birth outcomes of multiracial infants differ from those of their mono-racial counterparts and the extent to which disparities in birth outcomes are due to variation in socioeconomic background, prenatal health behaviors, and availability of social support. We find that (1) the birth outcomes of multiracial infants typically fall somewhere in between those of their mono-racial counterparts, (2) outcomes vary by mother’s race/ethnicity for some multiracial combinations, and (3) socioeconomic disparities account for a significant portion of the difference in rates of low birthweight between multi- and mono-racial infants born to White parents, while masking differences between infants born to Hispanic parents. Finally, differences in prenatal health behaviors and social support from baby’s father also play an important role in accounting for disparities in birth outcomes between multiracial infants and their mono-racial counterparts.
    Keywords: multiracial, children, births, infants, low birth weight
    JEL: D10 I00 I31 J13 J15
    Date: 2013–07
  23. By: Dean Spears (Princeton University)
    Abstract: Physical height is an important economic variable re ecting health and human capital. Puzzlingly, however, differences in average height across developing countries are not well explained by differences in wealth. In particular, children in India are shorter, on average, than children in Africa who are poorer, on average, a paradox which is often called the Asian enigma. The primary contribution of this paper is to document that cross-country variation in sanitation statistically explains a large and important fraction of international height dierences. Over a billion people worldwide and more than half of Indian households defecate openly without using a toilet or latrine, introducing germs into the environment that cause disease and stunt children's growth. I apply three complementary empirical strategies to Demographic and Health Survey data to identify the fraction due to sanitation: country-level regressions using collapsed DHS surveys; within-country analysis of differences between India's first and second DHS surveys; and econometric decomposition of the India-Africa height difference in child-level data. Open defecation, which is exceptionally widespread in India, accounts for much of the excess stunting in India.
    Keywords: India, children, growth rate, height, sewage, wealth
    JEL: R29 D63 I10 I39 Q53
    Date: 2012–12
  24. By: Vincenzo Atella (University of Rome Tor Vergata and CHP-PCOR Stanford University); Agar Brugiavini (Universy Ca' Foscari of Venice and Venice International University); Noemi Pace (xUniversy Ca' Foscari of Venice, and CEIS Tor Vergata)
    Abstract: This paper aims at evaluating the impact of 1998 Chinese health care reform on out-of-pocket expenditure and on saving. Existing evidence on the results achieved by this reform in terms of reduction of out-of-pocket medical expenditures is still mixed and contradictory, and very little is known about the impact of these measures on the consumption and saving behavior of the Chinese population. To shed more light on this issue we use data collected by the Chinese Household Income Project (CHIP), through a series of questionnaire-based interviews conducted in urban areas in 1995 and 2002. Contrary to previous evidence, our ndings suggest that, once properly accounting for unobserved heterogeneity (health status), out-of-pocket medical expenses and saving rate are affected by the reform in a differentiated way. In particular, we find that out-of-pocket expenses increase more for individuals with poor health status and the saving rate increases only for individual with good health status.
    Keywords: China, Health Insurance, Health care system reform, Household Saving, Out-of-pocket expenditures.
    JEL: D14 I13 P36
    Date: 2013–10–22
    Abstract: Consumers prefer bonus packs, as opposed to price discounts, for healthy foods, but they want a price discount rather than a bonus pack for indulgent foods (Mishra & Mishra, 2011). This study conceptually replicates and extends this finding to show that consumers are more responsive to changes in price than to changes in package size for indulgent food options, whereas they are more responsive to changes in package size than to changes in price for healthy food options.
    Keywords: sales promotion, packaging, price, food, vice, virtue
    Date: 2013–08
    Abstract: Since decades, scholars and policy makers have been interested in how fiscal policy influences entrepreneurship. Until now, research has focused on fiscal policy at the federal or regional level and used macro-economic outcome measures. Considerably less attention was given to how municipal governments can influence economic outcomes at the micro level. The present study examines the effect of municipal taxes, spending and tax compliance costs on firm profitability within the Flemish hospitality industry. This is a unique research setting, since Flemish municipalities have far-ranging fiscal autonomy which has resulted in a proliferation of local taxes, many of which are specific to the hospitality industry. The findings reveal that local taxes have a negative impact on firm profitability, while aggregate public spending has a positive influence. While both influences are economically significant, the tax effect exceeds the public spending impact. Finally, we find no impact of compliance costs from local taxes.
    Date: 2013–10

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