nep-hea New Economics Papers
on Health Economics
Issue of 2014‒03‒08
fourteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Reference-Dependent Effects of Unemployment on Mental Well-Being By Martina Grunow
  2. The Impact of R&D Cooperations on Drug Variety Offered on the Market. Evidence from the Pharmaceutical Industry By Tannista Banerjee; Ralph Siebert
  3. Patient Mobility, Health Care Quality and Welfare By Kurt R. Brekke; Rosella Levaggi; Luigi Siciliani; Odd Rune Straume
  4. Obesity and the Labor Market: A Fresh Look at the Weight Penalty By Marco Caliendo; Markus Gehrsitz
  5. Inequity in long-term care use and unmet need: two sides of the same coin By Pilar García-Gómez; Christina Hernandez-Quevedo; Dolores Jiménez-Rubio; Juan Oliva
  6. Cost-effectiveness of a universal strategy of brief dietary intervention for primary prevention in primary care: population-based cohort study and Markov model By Martin C. Gulliford; Nawaraj Bhattarai; Judith Charlton; Caroline Rudisill
  7. Ambient Temperature During Gestation and Cold-Related Adult Mortality in a Swedish Cohort, 1915 to 2002 By Bruckner, Tim A.; van den Berg, Gerard J.; Smith, Kirk R.; Catalano, Ralph A.
  8. Coal, Smoke, and Death: Bituminous Coal and American Home Heating By Barreca, Alan I.; Clay, Karen; Tarr, Joel
  9. Donating Time to Charity: Not Working for Nothing By Aoki, Yu
  10. The Miracle Drugs: Hormone Replacement Therapy and Labor Market Behavior of Middle-Aged Women By Daysal, N. Meltem; Orsini, Chiara
  11. A Validation Study of Transgenerational Effects of Childhood Conditions on the Third Generation Offspring's Economic and Health Outcomes Potentially Driven by Epigenetic Imprinting By van den Berg, Gerard J.; Pinger, Pia
  12. Social Security and the Rise in Health Spending By Kai Zhao
  13. Evidence of Adverse Selection in the Group Insurance Market By Eling, Martin; Jia, Ruo; Yao, Yi
  14. Do medical marijuana laws increase hard drug use? By Chu, Yu-Wei Luke

  1. By: Martina Grunow (University of Augsburg, Department of Economics)
    Abstract: Several contributions to the literature have shown that the perception of the individual employment status depends on the surrounding unemployment rate. We argue that expectations are a possible link between unemployment rates and the individual employment status regarding changes in mental well-being. Theoretical foundation comes from models for reference-dependent preferences with endogenous reference points. We provide a simple theoretical model to motivate and structure the empirical analysis. Using data from the German Socio-Economic Panel, we estimate a pairwise interacted model for employment status and expectations over two time periods. Life satisfaction is used as a proxy for mental well-being. To identify a causal effect of unemployment, expectations and their interactions on mental well-being, the analysis relies on fixed effects and exogenous entries into unemployment due to plant closures. We confirm the standard result that unemployment has a negative effect on mental well-being. Furthermore, the results deliver empirical evidence for reference-dependent effects of unemployment on mental well-being. We find that becoming unemployed unexpectedly is more severe as if the unemployment was expected. Therefore, this paper contributes to the understanding of how mental well-being is affected by unemployment and delivers empirical support for the theoretical models of reference-dependent preference wit endogenous reference points determined by expectations.
    Keywords: Subjective Well-Being, Unemployment, Reference-Dependence, Reference Points
    JEL: C23 D03 D84 I10 I18 J01 J60
    Date: 2014–02
  2. By: Tannista Banerjee; Ralph Siebert
    Abstract: Our study puts special attention to the fact that R&D cooperations in the pharmaceutical industry are formed at different stages throughout the drug development process. We study if the timing to engage in R&D cooperations in the pharmaceutical industry has different impacts on the technology and product markets. Using a comprehensive dataset on the pharmaceutical industry, and estimating a heterogeneous treatment effects model (Heckman et al., 2006) our results show that R&D cooperations formed at the early stages increase the number of R&D projects and the number of drugs launched on the product market. Most interestingly, late stage R&D cooperations significantly reduce the number of drugs launched on the market, even though they increased firms’ activity in the technology markets. This result highlights the fact that firms re-optimize their drug development portfolio to avoid wasteful duplication and cannibalizing the sales of the jointly developed drug in R&D cooperations. Our study show that firms cooperating in late stage collaborations re-optimize their individual drug development portfolios, which significantly reduces the number of drugs offered on the market.
    Keywords: drug development, dynamics, co-development, pharmaceutical industry, product variety, product market competition, Research and Development cooperation
    JEL: L24 L25 L65 D22
    Date: 2014
  3. By: Kurt R. Brekke; Rosella Levaggi; Luigi Siciliani; Odd Rune Straume
    Abstract: Patient mobility is a key issue in the EU who recently passed a new law on patients’ right to EU-wide provider choice. In this paper we use a Hotelling model with two regions that differ in technology to study the impact of patient mobility on health care quality, health care financing and welfare. We show that without patient mobility quality is too low (high) and too few (many) patients are treated in the high-skill (low-skill) region. The effects of patient mobility depend on the transfer payment. If the payment is below marginal cost, mobility leads to a ‘race-to-the-bottom’ in quality and lower welfare in both regions. If the payment is equal to marginal cost, quality and welfare remain unchanged in the high-skill region, but the low-skill region benefits. For a socially optimal payment, which is higher than marginal cost, quality levels in the two regions are closer to (but not at) the first best, but welfare is lower in the low-skill region. Thus, patient mobility can have adverse effects on quality provision and welfare unless an appropriate transfer payment scheme is implemented.
    Keywords: patient mobility, health care quality, regional and global welfare
    JEL: H51 H73 I11 I18
    Date: 2014
  4. By: Marco Caliendo; Markus Gehrsitz
    Abstract: This paper applies semiparametric regression models to shed light on the relation-ship between body weight and labor market outcomes in Germany. We find conclusive evidence that these relationships are poorly described by linear or quadratic OLS specifications, which have been the main approaches in previous studies. Women's wages and employment probabilities do not follow a linear relationship and are highest at a body weight far below the clinical threshold of obesity. This indicates that looks, rather than health, is the driving force behind the adverse labor market outcomes to which overweight women are subject. Further support is lent to this notion by the fact that wage penalties for overweight and obese women are only observable in white-collar occupations. On the other hand, bigger appears to be better in the case of men, for whom employment prospects increase with weight, albeit with diminishing returns. However, underweight men in blue-collar jobs earn lower wages because they lack the muscular strength required in such occupations.
    Keywords: Obesity, wages, employment, semiparametric regression, gender differences
    JEL: J31 J71 C14
    Date: 2014
  5. By: Pilar García-Gómez; Christina Hernandez-Quevedo; Dolores Jiménez-Rubio; Juan Oliva
    Abstract: International studies have shown evidence on inequity in use of health services of different kinds, depending on the type of health care service analysed. However, equity in the access to long-term care (LTC) services has received much less attention. We investigate the determinants of several LTC services and the existence of unmet need by the disabled population using unique data from a survey conducted on the disabled population in Spain in 2008. We further measure the level of horizontal inequity using methods based on the Concentration Index, a widely used indicator of income-related inequality in health. At the time of the analysis, only those respondents with the highest dependency level were covered by the recently introduced universal LTC system, which allows us to explore whether inequities remain for this subgroup of the population. In addition, we compare results using self-reported versus a more objective indicator of unmet needs. Evidence suggests that after controlling for a wide set of need variables, there is not an equitable distribution of use and unmet need of LTC services in Spain, with socioeconomic status being an important factor in access to LTC. We find that individuals at the higher end of the income distribution utilize a relatively larger share of formal services (provided by a professional), while intensive informal care (provided by friends and family) is concentrated among the worst-off. In terms of unmet needs for LTC services, their distribution depends on the service considered as well as on whether we focus on subjective or objective measures. Interestingly, for the population covered by the new universal LTC system, inequities in most LTC services and unmet needs remain statistically significant and even increase for certain services, in particular, formal services provided by professionals.
    Keywords: disability; equity in utilisation; dependency; long-term care; unmet needs; Spain
    JEL: N0
    Date: 2014–01
  6. By: Martin C. Gulliford; Nawaraj Bhattarai; Judith Charlton; Caroline Rudisill
    Abstract: Background A healthy diet is associated with reduced risk of diabetes, cardiovascular disease and cancer. The study aimed to evaluate the cost-effectiveness of a universal strategy to promote healthy diet through brief intervention in primary care. Methods The research was informed by a systematic review of randomised trials which found that brief interventions in primary care may be associated with a 0.5 portion per day increase in fruit and vegetable consumption. A Markov model that included five long-term conditions (diabetes, coronary heart disease, stroke, colorectal cancer and depression) was developed. Empirical data from a large cohort of United Kingdom-based participants sampled from the Clinical Practice Research Datalink populated the model. Simulations compared an intervention promoting healthy diet over 5 years in healthy adults, and standard care in which there was no intervention. The annual cost of intervention, in the base case, was one family practice consultation per participant year. Health service costs were included and the model adopted a lifetime perspective. The primary outcome was net health benefit in quality adjusted life years (QALYs). Results A cohort of 262,704 healthy participants entered the model. Intervention was associated with an increase in life years lived free from physical disease of 41.9 (95% confidence interval -17.4 to 101.0) per 1,000 participants entering the model (probability of increase 88.0%). New incidences of disease states were reduced by 28.4 (18.7 to 75.8) per 1,000, probability reduced 84.6%. Discounted incremental QALYs were 4.3 (-8.8 to 18.0) per 1,000, while incremental costs were £139,755 (£60,466 to 220,059) per 1,000. Net health benefits at £30,000 per QALY were -0.32 (-13.8 to 13.5) QALYs per 1,000 participants (probability cost-effective 47.9%). When the intervention was restricted to adults aged 50 to 74 years, net health benefits were 2.94 (-21.3 to 26.4) QALYs per 1000, probability increased 59.0%. Conclusions A universal strategy to promote healthy diet through brief intervention in primary care is unlikely to be cost-effective, even when delivered at low unit cost. A targeted strategy aimed at older individuals at higher risk of disease might be more cost-effective. More effective dietary change interventions are needed.
    Keywords: dietary intervention; primary care; Markov mode; cost effectiveness; outcomes; diabetes; coronary heart disease; stroke; colorectal cancer; depression
    JEL: J50
    Date: 2014–02–02
  7. By: Bruckner, Tim A. (University of California, Irvine); van den Berg, Gerard J. (University of Mannheim); Smith, Kirk R. (University of California, Berkeley); Catalano, Ralph A. (University of California, Berkeley)
    Abstract: For all climatic regions, mortality due to cold exceeds mortality due to heat. We examine whether cold-related mortality in adulthood varies positively with unusually benign ambient temperature during gestation, using data on over 13,500 Swedes from the Uppsala Birth Cohort Study born in 1915-1929 and followed until 2003. We link daily thermometer temperatures in Uppsala (1914 to 2002) to subjects, from their estimated date of conception onwards. We estimate survival models with time-varying explanatory variables, focusing on the two leading causes of cold-related death in adulthood: ischaemic heart disease (IHD) and stroke. An increase in the prevalence of warm temperatures during gestation leads to a significantly higher rate of mortality due to cold-related IHD. However, we do not find such a relation for cold-related stroke mortality. Additional analyses show that birthweight percentile or gestational age do not mediate discovered findings. The IHD results indicate that ambient temperature during gestation – independent of birth month – modifies the relation between cold and adult mortality.
    Keywords: health, climate, cerebrovascular disorders, cold spells, fetal development, ischaemic heart disease, temperature regulation, migration
    JEL: I12 Q54
    Date: 2014–02
  8. By: Barreca, Alan I. (Tulane University); Clay, Karen (Carnegie Mellon University); Tarr, Joel (Carnegie Mellon University)
    Abstract: Air pollution was severe in many urban areas of the United States in the first half of the twentieth century, in part due to the burning of bituminous coal for heat. We estimate the effects of this bituminous coal consumption on mortality rates in the U.S. during the mid-20th century. Coal consumption varied considerably during the 20th century due to coal-labor strikes, wartime oil and gas restrictions, and the expansion of gas pipelines, among other reasons. To mitigate the influence of confounding factors, we use a triple-differences identification strategy that relies on variation in coal consumption at the state-year-season level. It exploits the fact that coal consumption for heating was highest in the winter and uses within-state changes in mortality in non-winter months as an additional control group. Our estimates suggest that reductions in the use of bituminous coal for heating between 1945 and 1960 decreased winter all-age mortality by 1.25 percent and winter infant mortality by 3.27 percent, saving 1,923 all age lives per winter month and 310 infant lives per winter month. Our estimates are likely to be a lower bound, since they primarily capture short-run relationships between coal and mortality.
    Keywords: air pollution, coal, mortality, infant mortality, heating
    JEL: Q53 N72 I18 N32 N52
    Date: 2014–02
  9. By: Aoki, Yu (University of Aberdeen)
    Abstract: This paper explores the causal effect of volunteer work providing daily assistance to the elderly on elderly mortality. To identify the causal effect, I exploit the earthquake that occurred in midwestern Japan in 1995 as a natural experiment inducing exogenous variation in the level of volunteering. The municipalities hit by the earthquake experienced a sharp increase in the level of volunteering. Based on a comparison of mortality between the municipalities with no or little loss of life due to the earthquake, that experienced the sharp increase in the level of volunteering, and the nearby municipalities that were not hit by the earthquake, I find that volunteering significantly reduced elderly mortality. Close attention is paid to ensure that the results are not driven by the direct effects of the earthquake.
    Keywords: volunteer labor, charity, mortality
    JEL: I10 J14
    Date: 2014–02
  10. By: Daysal, N. Meltem (University of Southern Denmark); Orsini, Chiara (London School of Economics)
    Abstract: In an aging society, determining which factors contribute to the employment of older individuals is increasingly important. We examine the impact of medical innovations on the employment of middle-aged women focusing on the specific case of Hormone Replacement Therapy (HRT), a common treatment for the alleviation of negative menopausal symptoms. HRT medications were among the most popular prescriptions in the United States until 2002 when the Women's Health Initiative Study – the largest randomized control trial on women ever undertaken – documented the health risks associated with their long term use. We exploit the release of these findings within a Fixed Effect Instrumental Variable framework to address the endogeneity in HRT use. Our results indicate substantial benefits of HRT use to the short-term employment of middle-aged women.
    Keywords: employment, pharmaceutical treatments, Hormone Replacement Therapy
    JEL: I1 H8 J2
    Date: 2014–02
  11. By: van den Berg, Gerard J. (University of Mannheim); Pinger, Pia (University of Bonn)
    Abstract: At the crossroads of economics and human biology, this paper examines the extent to which pre-puberty nutritional conditions in one generation affect productivity-related outcomes in later generations. Recent studies have found a negative association between conditions at ages 8-12 and the grandchild's over-all and cardiovascular and diabetes mortality in a single historical dataset. It has been argued that this association reflects epigenetic imprinting, which has been corroborated in animal studies. We provide an external validation by analyzing the impact of the German famine of 1916-1918 on children and grandchildren of those exposed to the famine at ages 8-12. Our findings support and extend the evidence so far. Among the third generation, males (females) tend to have higher mental health scores if their paternal grandfather (maternal grandmother) was exposed. We do not find robust effects on the probability of obtaining an upper secondary education.
    Keywords: famine, transgenerational transmission, epigenetics, mental health, education, long-run effects, nutrition, intergenerational effects, slow-growth period
    JEL: I12 J11
    Date: 2014–02
  12. By: Kai Zhao (University of Connecticut)
    Abstract: In a quantitative model of Social Security with endogenous health, I argue that Social Security increases the aggregate health spending of the economy because it redistributes resources to the elderly whose marginal propensity to spend on health is high. I show by using computational experiments that the expansion of US Social Security can account for over a third of the dramatic rise in US health spending from 1950 to 2000. In addition, Social Security has a spill-over effect on Medicare. As Social Security increases health spending, it also increases the payments from Medicare, thus raising its financial burden.
    Keywords: Social Security, Health Spending, Saving, Longevity
    JEL: E20 E60 H30 I00
    Date: 2014–01
  13. By: Eling, Martin; Jia, Ruo; Yao, Yi
    Abstract: This paper demonstrates the existence of adverse selection in the group insurance market with no individual choice. We provide evidence against the “conventional wisdom” that group insurance mitigates adverse selection because of the mixture of high risks and low risks. We show, however, that asymmetric learning effects mitigate the group adverse selection after a few policy periods.
    Keywords: Information Asymmetry, Asymmetric Learning, Insurance Decision, Group Health Insurance, Critical Illness Insurance
  14. By: Chu, Yu-Wei Luke
    Abstract: Medical marijuana laws generate significant policy debates regarding drug policy. In particular, if marijuana is a complement or a gateway drug to hard drugs, these laws would increase not only the usage of marijuana but hard drugs such as cocaine and heroin. In this paper, I empirically study the relationships between marijuana and cocaine or heroin by analyzing data on drug possession arrests and rehabilitation treatment admissions. I find that medical marijuana laws increase marijuana arrests and treatments by 10–20%. However, there is no evidence that cocaine and heroin usage increases after the passage of medical marijuana laws. In fact, the estimates on cocaine and heroin arrests or treatments are uniformly negative. From the arrest data, the estimates indicate a 0–20% decrease in possession arrests for cocaine and heroin combined. From the treatment data, the estimates show a 20% decrease in heroin treatments but no significant effect on cocaine treatments. These results suggest that marijuana could be a substitute for heroin.
    Keywords: Cocaine, Heroin, Illegal drug use, Marijuana, Medical marijuana laws,
    Date: 2014

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