nep-hea New Economics Papers
on Health Economics
Issue of 2014‒07‒21
nineteen papers chosen by
Yong Yin
SUNY at Buffalo

  1. Getting a healthy start? Nudge versus economic incentives By Rachel Griffith; Sarah Smith; Stephanie von Hinke Kessler Scholder
  2. The Effect of Leisure-time Physical Activity on Obesity, Diabetes, High BP and Heart Disease among Canadians: Evidence from 2000/01 to 2005/06 By Sisira Sarma; Rose Anne Devlin; Jason Gilliland; Karen Campbell; Gregory Zaric
  3. Baby Boomer caregivers in the workforce: Do they fare better or worse than their predecessors? By Josephine Jacobs; Courtney Van Houtven; Audrey Laporte; Peter Coyte
  4. Changing Healthcare Capital-To-Labor Ratios: Evidence and Implications for Bending the Cost Curve in Canada and Beyond By Eric Nauenberg
  5. Should the Grossman model retain its Iconic status in health economics? By Audrey Laporte
  6. Optimal Co-Payment Policy In Health Care: Competition, Ownership Structure And Quality Provision By Rune Stenbacka; Mihkel Tombak
  7. Paying For Primary Care: The Factors Associated With Physician Self-Selection Into Payment Models By David Rudoler; Raisa Deber; Janet Barnsley; Richard Glazier; Audrey Laporte
  8. Retail Tobacco Display Bans By Ian Irvine; Hai Nguyen
  9. A Synthesis of the Grossman and Becker-Murphy Models of Health and Addiction: Theoretical and Empirical Implications By Andrew Jones; Audrey Laporte; Nigel Rice; Eugenio Zucchelli
  10. The Impact of Informal Caregiving Intensity on Women's Retirement in the United States By Josephine Jacobs; Courtney Van Houtven; Audrey Laporte; Peter Coyte
  11. Theoretical Simulation in Health Economics: An application to Grossman's Model of Investment in Health Capital By Katerina Koka; Audrey Laporte; Brian Ferguson
  12. Minimum Wages And Adolescent Alcohol Use: Evidence From A Natural Experiment By Stephenson Strobel; Alex Peden; Evelyn Forget
  13. Time Use and Productivity: The Wage Returns to Sleep By Gibson, Matthew; Shrader, Jeffrey
  14. Wealth Shocks and Health Outcomes: Evidence from Stock Market Fluctuations By Hannes Schwandt
  15. Is There ``Too Much'''' Inequality in Health Spending Across Income Groups? By Laurence Ales; Roozbeh Hosseini; Larry Jones
  16. GPs’ response to price regulation: evidence from a nationwide French reform By Coudiny, Elise; Plaz, Anne; Samson, Anne-Laure
  17. Health and Mortality Delta: Assessing the Welfare Cost of Household Insurance Choice By Yogo, Motohiro; Koijen, Ralph S.J.; Van Nieuwerburgh, Stijn
  18. Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium By Bart J. Bronnenberg; Jean-Pierre Dubé; Matthew Gentzkow; Jesse M. Shapiro
  19. Health Care Quality vs Health Care Quantity: A General Equilibrium Analysis By Chatterjee, Tonmoy; Gupta, Kausik

  1. By: Rachel Griffith; Sarah Smith; Stephanie von Hinke Kessler Scholder
    Abstract: We compare the effects of economic incentives with a “nudge” (a policy intervention that aims to influence behaviour through changing the “choice architecture”) in relation to improving dietary choices. We study a large-scale, nationally-implemented policy – the UK Healthy Start Scheme – that aimed to increase fruit and vegetable consumption. The policy combined standard economic incentives with elements of nudge, the most important of which is a potential labelling effect. We show that the scheme was successful; the estimated intention to treat effect indicates that spending on fruit and vegetables increased by 15 per cent, or roughly two-thirds of a portion per household per day. The response can be attributed entirely to the economic incentive effects; there is no evidence of any effect from the nudge aspects of the policy.
    Keywords: dietary choices; nudge policies; targeted benefits
    JEL: D12 I18
    Date: 2014–06
  2. By: Sisira Sarma; Rose Anne Devlin; Jason Gilliland; Karen Campbell; Gregory Zaric
    Abstract: Although many papers have looked at the effect of physical activity on obesity and other health outcomes, the causal nature of this relationship remains unclear. We try to fill this gap by investigating the impact of leisure-time physical activity (LTPA) and work-related physical activity (WRPA) on obesity and chronic conditions in Canadian adults aged 18-75 using instrumental variable and recursive bivariate probit approaches. Average local temperatures surrounding the respondents' interview month are used as a novel instrument to help identify the causal relationship between LTPA and health outcomes. We find that an active level of LTPA (i.e. walking greater than or equal to 1 hour/day) reduces the probability of obesity by five percentage points, which increases to eleven percentage points if also combined with some work-related physical activity. WRPA exhibits a negative effect on the probability of obesity and chronic conditions.
    Keywords: obesity, physical activity, chronic disease, probit, instrumental variable, recursive bivariate probit, canada
    JEL: I10 I12 I18 J18 C23
    Date: 2013–11
  3. By: Josephine Jacobs; Courtney Van Houtven; Audrey Laporte; Peter Coyte
    Abstract: Since the 1960's there have been substantial increases in women's labor force attachment. Meanwhile, increases in life expectancy and a shifting focus to care in community settings have increased the odds of becoming a caregiver. In light of these changes and the unpaid leave policies introduced in the 1990s to reduce this role strain, it is important to assess whether the labor market outcomes of caregivers have changed over time. We explored the impact of caregiving on women's labor force outcomes and whether this effect was different for women in the Baby Boomer generation versus women born in the pre-World War II years. Using data from the American National Longitudinal Surveys of Young Women and Mature Women, we followed two cohorts of pre-retirement aged women at similar points in their careers. We used pooled and fixed-effects regressions and found that intensive informal caregiving was negatively associated with labor force participation for both pre-Baby Boomers and Baby Boomers. Further, the caregiving effects were not significantly different across cohorts. Caregiving was not significantly associated with the hours worked or wages. This study provides a first step in establishing that caregiving labor market penalties have persisted over time, despite the introduction of offsetting policies.
    Keywords: Informal caregiving, unpaid caregiving, labor force participation, cohort, gender, United States
    JEL: J22 J1 I11
    Date: 2014–01
  4. By: Eric Nauenberg
    Abstract: Healthcare capital-to-labor ratios are examined for the 10 provincial single-payer health care plans across Canada. The data show an increasing trend--particularly during the period 1997-2009 during which the ratio as much as doubled from 10% to 20%. Multivariate analyses indicate that every percentage point uptick in the rate of increase in this ratio is associated with an uptick in the rate of increase of real per capita provincial government healthcare expenditures by approximately $31 (p less than 0.01). While the magnitude of this relationship is not large, it is still substantial enough to warrant notice: every percentage point decrease in the upward trend of the capital-to-labor ratio might be associated with a one percentage point decrease in the upward trend of per capita government healthcare expenditures. An uptick since 1997 in the rate of increase in per capita prescription drug expenditures is also associated with a decline in the trend of increasing per capita healthcare costs. While there has been some recent evidence of a slowing in the rate of health care expenditure increase, it is still unclear whether this reflects just a pause, after which the rate of increase will return to its baseline level, or a long-term shift; therefore, it is important to continue to explore various policy avenues to affect the rate of change going forward.
    Keywords: Expenditures, trends, labor, capital, drugs
    JEL: I11
    Date: 2014–02
  5. By: Audrey Laporte
    Keywords: Health economics, grossman model, theoretical framework
    JEL: I12
    Date: 2014–02
  6. By: Rune Stenbacka; Mihkel Tombak
    Abstract: We analytically characterize the effects of ownership and competition in the health care industry on quality provision, market coverage and optimal co-payment policy. A private monopoly selects a lower quality than a public supplier, and the socially optimal co-payment rate with a private monopoly exceeds that with a public monopoly. We establish that the optimal co-payment policy is invariant to the introduction of private competition. Thus, market coverage is invariant to the introduction of competition, whereas all consumers with a higher willingness to pay for quality are better off with competition.
    Keywords: Public vs private health care provision, competition in health care, health care quality, quality differentiation, mixed duopoly
    JEL: I11 I18 L10
    Date: 2014–03
  7. By: David Rudoler; Raisa Deber; Janet Barnsley; Richard Glazier; Audrey Laporte
    Abstract: In this paper we use a panel of administrative data to determine the factors associated with primary care physician self-selection into different payment models in Ontario, Canada. We find that primary care physicians will self-select into payment models based on existing practice and individual characteristics. These patterns of self-selection largely follow a utility maximizing model of physician behaviour; physicians with more complex patient populations are less likely to switch into capitation-based payment models where higher levels of effort are not financially rewarded. These findings have implications for future work that considers the impact of payment incentives on provider behaviour, and for governments introducing multiple payment models in a single healthcare sector.
    Keywords: Physician behaviour, financial incentives, administrative data, panel data
    JEL: D22 D21 I11
    Date: 2014–03
  8. By: Ian Irvine; Hai Nguyen
    Abstract: Bans on retail tobacco displays, of the type proposed by New York's Mayor Bloomberg in March 2013, have been operative in several economies since 2001. Despite an enormous number of studies in public health journals using attitudinal data, we can find no population-based econometric studies of the type normally used in Economics. This paper attempts to fill that gap by using data from the annual Canadian Tobacco Use Monitoring Surveys. These data afford an ideal opportunity to study events of this type given that each of Canada's provinces implemented display bans at various points between 2003 and 2009. We use difference-in-differences methods to study three behaviors following the introduction of bans: participation in smoking, the intensity of smoking and quit intentions. A critical element of the study concerns the treatment of contraband tobacco. Our estimates provide little support for the hypothesis that behaviors changed significantly following the bans, although there is evidence that the ban reduced smoking intensity among youth.
    Keywords: Cigarettes, display ban, smoking participation, intensity, quit intention
    JEL: H2 I12 I18
    Date: 2014–03
  9. By: Andrew Jones; Audrey Laporte; Nigel Rice; Eugenio Zucchelli
    Abstract: This paper develops and estimates a model that integrates two fundamental theories of individual health behaviour: the Becker-Murphy model of rational addiction and the Grossman model of health investment. We define an individual's lifetime smoking consumption pattern and investments in health capital as simultaneous choices within a single optimization problem allowing for the presence of an addiction stock and investments in preventive medical care. The resulting system of first-order difference equations is reduced to a single fourth-order difference equation defined both for smoking and health and which preserve the dynamic roots of the system. GMM systems estimation using the British Household Panel Survey reveals strong persistence in the evolution of both smoking consumption and health capital with direct effects of past health and smoking observed for up to three and four lagged periods for men and women respectively. Conditional on dynamics there is a limited role for the direct effects of socio-economic status. A convincing understanding of an individual's optimal lifetime health trajectory requires an appreciation of how both investments and accumulated disinvestments in health separately impact on the dynamics of health capital. The integrated approach presented here offers such a framework.
    Keywords: Addiction, health capital, smoking, dynamic panel data models
    JEL: C1 C3 C5 C6 I1
    Date: 2014–04
  10. By: Josephine Jacobs; Courtney Van Houtven; Audrey Laporte; Peter Coyte
    Abstract: With increasing pressure on retirement-aged individuals to provide informal care while remaining in the workforce, it is important to understand the impact of informal care demands on individuals' retirement decisions. This paper explores whether different intensities of informal caregiving can lead to retirement for women in the United States. Using the National Longitudinal Survey of Mature Women, we control for time-invariant heterogeneity and for time-varying sources of bias with a two-stage least squares model with fixed effects. We find that there is no significant effect on retirement for all informal caregivers, but there are important incremental effects of caregiving intensity. Women who provide at least 20 hours of informal care per week are 3 percentage points more likely to retire relative to other women. We also find that when unobserved heterogeneity is controlled for with fixed effects, we cannot reject exogeneity. These findings suggest that policies encouraging both informal care and later retirement may not be feasible without allowances for flexible scheduling or other supports for working caregivers.
    Keywords: Informal caregiving, unpaid care, retirement, United States
    JEL: J22 J1 I11
    Date: 2014–04
  11. By: Katerina Koka; Audrey Laporte; Brian Ferguson
    Abstract: In this paper we argue on the merits of theoretical simulation, a widely used technique in other areas of theoretical economics, to extending the phase diagram analysis of the Grossman's 1972 model of investment in health capital. We argue that theoretical simulations are particularly useful when considering problems with multiple state variables. To illustrate, we perform simulations with varying assumptions of health depreciation rates and conditional survival probabilities and generate time-plots for the evolution of health capital and health investments over individual finite lifetimes.
    Keywords: Theoretical simulation, grossman model, health capital
    JEL: I12 C61 C63
    Date: 2014–06
  12. By: Stephenson Strobel; Alex Peden; Evelyn Forget
    Abstract: Renewed interest in the minimum wage has led many policy makers to consider it as a possible strategy to achieve poverty reduction. Literature on the social determinants of health has intimately linked health with income and so if such a policy reduced poverty it may lead to beneficial health outcomes. We consider the possibility of adverse health outcomes associated with minimum wage hikes. Using a sample of adolescents from Newfoundland and Labrador, we examine the impact of a two-tiered minimum wage law on their frequency of alcohol use and frequency of getting drunk over the period of 1998 to 2001. We exploit this two-tiered wage by using a differences-in-differences econometric approach where formally employed adolescents who would be eligible for the minimum wage are compared to informally employed and unemployed adolescents. As they age, the formally employed group was eligible for the higher minimum wage but the comparison groups were not. Our results demonstrate that being eligible for the minimum wage increased the frequency with which the formal group got drunk but did not increase their frequency of alcohol use as compared to the informal and unemployed groups.
    Keywords: Alcohol; adolescents; minimum wage; difference-in-differences regression
    Date: 2014–06
  13. By: Gibson, Matthew; Shrader, Jeffrey
    Abstract: While economists have long been interested in effects of health and human capital on productivity, less attention has been paid to the influence of time use. We investigate the productivity effects of the single largest use of time--sleep. Because sleep influences performance on memory and focus intensive tasks, it plausibly affects economic outcomes. We identify the effect of sleep on wages by exploiting the relationship between sunset time and sleep duration. Using a large, nationally representative set of time use diaries from the United States, we provide the first causal estimates of the impact of sleep on wages: a one-hour increase in long-run average sleep increases wages by 16%, equivalent to more than one year of schooling. We also document the nonlinearity of the sleep-wage relationship. Our results highlight the economic importance of sleep and pose potentially fruitful questions about the effects of time use on labor market outcomes. (JEL No. J22, J24, J31)
    Keywords: Social and Behavioral Sciences
    Date: 2014–07–14
  14. By: Hannes Schwandt
    Abstract: Do wealth shocks affect the health of the elderly in developed countries? The economic literature is skeptical about such effects which have so far only been found for poor retirees in poor countries. In this paper I show that wealth shocks also matter for the health of wealthy retirees in the US. I exploit the booms and busts in the US stock market as a natural experiment that generated considerable gains and losses in the wealth of stock-holding retirees. Using data from the Health and Retirement Study I construct wealth shocks as the interaction of stock holdings with stock market changes. These constructed wealth shocks are highly predictive of changes in reported wealth. And they strongly affect health outcomes. A 10% wealth shock leads to an improvement of 2-3% of a standard deviation in physical health, mental health and survival rates. Effects are heterogeneous across physical health conditions, with most pronounced effects for the incidence of high blood pressure, smaller effects for heart problems and no effects for arthritis, diabetes, lung diseases and cancer. The comparison with the cross-sectional relationship of wealth and health suggests that the estimated effects of wealth shocks are larger than the long-run wealth elasticity of health.
    Keywords: Retiree health, wealth shocks, stock market
    JEL: G10 I10 J14
    Date: 2014–07
  15. By: Laurence Ales; Roozbeh Hosseini; Larry Jones
  16. By: Coudiny, Elise; Plaz, Anne; Samson, Anne-Laure
    Abstract: This paper uses a French reform to evaluate the impacts of price regulation on general practitioners (GP) care provision, fees, and income. This reform has restricted, since 1990, the conditions self-employed GPs have to fulfill to be allowed to over-bill. We exploit 2005 and 2008 Public Health insurance administrative data on GPs activity and fees. We use regression discontinuity techniques in a fuzzy design to estimate causal impacts for GPs who set up practice in 1990 and were constrained to charge regulated prices. Our results suggest that GPs react to income effects. Under price regulation, facing prices lower of 42%, GPs provide 50% of more care than if they could overbill. Male GPs react more than female GPs, which leads to opposite effects on their labor income. GPs are more accessible to patients but may also induce demand. They reduce aside salaried activities, use more lump-sum payment schemes, and occupy more often gate-keeper positions. A complementary analysis at dates closer to the reform suggests that these figures may underestimate the short-term effects of price regulation.
    Keywords: Extra-billings; fee-for-service; GPs’ activity; causal evaluation; regression discontinuity;
    JEL: I11 C21 H51
    Date: 2014–06
  17. By: Yogo, Motohiro (Federal Reserve Bank of Minneapolis); Koijen, Ralph S.J. (London Business School); Van Nieuwerburgh, Stijn (New York University)
    Abstract: We develop a pair of risk measures, health and mortality delta, for the universe of life and health insurance products. A life-cycle model of insurance choice simplifies to replicating the optimal health and mortality delta through a portfolio of insurance products. We estimate the model to explain the observed variation in health and mortality delta implied by the ownership of life insurance, annuities including private pensions, and long-term care insurance in the Health and Retirement Study. For the median household aged 51 to 57, the lifetime welfare cost of market incompleteness and suboptimal choice is 3.2% of total wealth.
    Keywords: Annuities; Health insurance; Life-cycle model; Life insurance; Portfolio choice
    JEL: D14 D91 G11 I13
    Date: 2014–06–11
  18. By: Bart J. Bronnenberg; Jean-Pierre Dubé; Matthew Gentzkow; Jesse M. Shapiro
    Abstract: We estimate the effect of information on consumers' willingness to pay for national brands in physically homogeneous product categories. We measure consumer information using education, occupation, and a survey-based measure of product knowledge. In a detailed case study of headache remedies we find that more informed consumers are less likely to pay extra to buy national brands, with pharmacists choosing them over store brands only 9 percent of the time, compared to 26 percent of the time for the average consumer. In a similar case study of pantry staples such as salt and sugar, we show that chefs devote 12 percentage points less of their purchases to national brands than demographically similar non-chefs. We extend our analysis to cover 50 retail health categories and 241 food and drink categories and use the resulting estimates to fit a stylized model of demand and pricing. The model allows us to quantify the extent to which brand premia result from misinformation, and the way more accurate beliefs would change the division of surplus among manufacturers, retailers, and consumers.
    JEL: D12 D83 L66
    Date: 2014–07
  19. By: Chatterjee, Tonmoy; Gupta, Kausik
    Abstract: This paper attempts to relate the issues of health care quality with international trade. For this purpose we have mixed both flavours of Heckscher-Ohlin-Samuelson and Neo- Heckscher-Ohlin frameworks and developed a hybrid type of trade theoretic general equilibrium model. In such a set up we have shown that a movement from a regime of international health capital immobility to a regime of international health capital mobility may lead to an expansion of the health quality exporting sector. Apart from quality aspect of health services, the quantity aspect of health care has been also considered in this study. Moreover, from that hybrid model we have illustrated that the sizes of health care and composite export sector expand, where as import sector of our small open economy contracts.
    Keywords: Health Care quality, International trade, International health capital mobility and General equilibrium.
    JEL: F11 F21 I11 I15
    Date: 2014–06–01

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