nep-hea New Economics Papers
on Health Economics
Issue of 2019‒06‒10
nineteen papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Targeting Disability Insurance Applications with Screening By Godard, Mathilde; Koning, Pierre; Lindeboom, Maarten
  2. Opioid epidemics By Strulik, Holger
  3. Correcting for Transitory Effects in RCTs: Application to the RAND Health Insurance Experiment By Kevin Devereux; Mona Balesh Abadi; Farah Omran
  4. Controlling Tuberculosis? Evidence from the First Community-Wide Health Experiment By Karen Clay; Peter Juul Egedesø; Casper Worm Hansen; Peter Sandholt Jensen; Avery Calkins
  5. Racial Residential Segregation and Black Low Birth Weight, 1970-2010 By Niemesh, Gregory; Shester, Katharine
  6. Infant health, cognitive performance and earnings: evidence from inception of the welfare state in Sweden By Bhalotra, Sonia; Karlsson, Martin; Nilsson, Therese; Schwarz, Nina
  7. Reclassification to Avoid Consumer Cost-Sharing in Group Health Plans By Olesya Fomenko; Jonathan Gruber
  8. Do measures of risk attitude in the laboratory predict behavior under risk in and outside of the laboratory? By Gary Charness; Thomas Garcia; Theo Offerman; Marie Claire Villeval
  9. Depression, Risk Preferences and Risk-Taking Behavior By Deborah A. Cobb-Clark; Sarah Dahmann; Nathan Kettlewell
  10. Early Health, Risk Aversion and Stock Market Participation By Böckerman, Petri; Conlin, Andrew; Svento, Rauli
  11. Health of immigrant children: the role of immigrant generation, exogamous family setting, and family material and social resources By Silvia Loi; Joonas Pitkänen; Heta Moustgaard; Mikko Myrskylä; Pekka Martikainen
  12. Will You Marry Me ... if Our Children Are Healthy? The Impact of Maternal Age and the Associated Risk of Having a Child with Health Problems on Family Structure By Gutierrez, Federico H.
  13. The Effect of Unemployment on the Smoking Behavior of Couples By Jakob Everding; Jan Marcus
  14. Billionaires, millionaires, inequality, and happiness By Popov, Vladimir
  15. Mortality Options: the Point of View of an Insurer By Schmeck, Maren Diane; Schmidli, Hanspeter
  16. Productivity Effects of Dengue in Brazil By Bhalotra, Sonia; Rocha, Rudi
  17. Not Evidence for Baumol’s Cost Disease By Akinwande Atanda; W. Robert Reed
  18. A health 'Kuznets' curve'? Cross-section and longitudinal evidence on concentration indices By Costa-Font, Joan; Hernández-Quevedo, Cristina; Sato, Azusa
  19. Can Transparency and Accountability Programs Improve Health? Experimental Evidence from Indonesia and Tanzania By Arkedis, Jean; Creighton, Jessica; Dixit, Akshay; Fung, Archon; Kosack, Stephen; Levy, Dan; Tolmie, Courtney

  1. By: Godard, Mathilde (GATE, University of Lyon); Koning, Pierre (Leiden University); Lindeboom, Maarten (Vrije Universiteit Amsterdam)
    Abstract: We examine the targeting effects of increased scrutiny in the screening of Disability Insurance (DI) applications using exogenous variation in screening induced by a policy reform. The reform raised DI application costs and revealed more information about the true disability status of applicants at the point of the award decision. We use administrative data on DI claims and awards and merge these with other administrative data on hospitalization, mortality and labor market outcomes. Regression Discontinuity in Time (RDiT) regressions show substantial declines in DI application rates and changes in the composition of the pool of applicants. We find that the health of those who are not discouraged from applying is worse than those who are. This suggests that the pool of applicants becomes more deserving. At the same time, compared with those who did not apply under the old system of more lax screening, those who are discouraged from applying are in worse health, have substantially lower earnings and are more often unemployed. This indicates that there are spillovers of the DI reform to other social insurance programs. As we do not find additional screening effects on health at the point of the award decision, we conclude that changes in the health condition of the pool of awarded applicants are fully driven by self-screening of (potential) applicants.
    Keywords: disability insurance, screening, composition effects, targeting efficiency
    JEL: H2 I3
    Date: 2019–05
  2. By: Strulik, Holger
    Abstract: In this paper, I propose an economic theory that addresses the epidemic character of opioid epidemics. I consider a community in which individuals are heterogenous with respect to the experience of chronic pain and susceptibility to addiction and live through two periods. In the first period they consider whether to treat pain with opioid pain relievers (OPRs). In the second period they consider whether to continue non-medical opioid use to feed an addiction. Non-medical opioid use is subject to social disapproval, which dependents negatively on the share of opioid addicts in the community. An opioid epidemic is conceptualized as the transition from an equilibrium at which opioid use is low and addiction is highly stigmatized to an equilibrium at which opioid use is prevalent and social disapproval is low. I show how such a transition is initiated by the wrong belief that OPRs are not very addictive. Under certain conditions there exists an opioid trap such that the community persists at the equilibrium of high opioid use after the wrong belief is corrected. Refinements of the basic model consider the recreational use of prescription OPRs and an interaction between income, pain, and addiction.
    Keywords: addiction,pain,opioids,stigma,social interaction,information constraints
    JEL: D91 I12 I14
    Date: 2019
  3. By: Kevin Devereux; Mona Balesh Abadi; Farah Omran
    Abstract: The long run price elasticity of healthcare spending is critically important to estimating the cost of provision. However, temporary randomized controlled trials may be confounded by transitory effects. This paper shows evidence of a 'deadline effect' – a spike in spending in the final year of the program – among participants of the RAND Health Insurance Experiment, long considered the definitive RCT in the field. The deadline effect is economically and statistically significant, with power to identify coming from random allocation to three- or five-year enrolment terms. The deadline effect interacts with the price elasticity: participants who face lower coinsurance rates show larger spending spikes. Crucially, controlling for the price-deadline interaction yields significantly smaller estimates of the price elasticity in non-deadline years, which we argue is a better approximation for the long run elasticity. This has important implications for public finance and the design of private/temporary subsidy programs.
    Keywords: Health insurance; Moral hazard; Public health; RCTs
    JEL: C93 D91 H31 H42 H51 I12 I13
    Date: 2019–04
  4. By: Karen Clay; Peter Juul Egedesø; Casper Worm Hansen; Peter Sandholt Jensen; Avery Calkins
    Abstract: This paper studies the immediate and long-run mortality effects of the first community-based health intervention in the world – the Framingham Health and Tuberculosis Demonstration, 1917-1923. The official evaluation committee and the historical narrative suggest that the demonstration was highly successful in controlling tuberculosis and reducing mortality. Using newly digitized annual cause-of-death data for municipalities in Massachusetts, 1901-1934, and different empirical strategies, we find little evidence to support this positive assessment. In fact, we find that the demonstration did not reduce tuberculosis mortality, all-age mortality, nor infant mortality. These findings contribute to the ongoing debate on whether public-health interventions mattered for the decline in (tuberculosis) mortality prior to modern medicine. At a more fundamental level, our study questions this particular type of community-based setup with non-random treatment assignment as a method of evaluating policy interventions.
    JEL: I15 I18 N32
    Date: 2019–05
  5. By: Niemesh, Gregory; Shester, Katharine
    Abstract: The black-white gap in low birth weight in the United States remains large and mostly unexplained. A large literature links segregation to adverse black birth outcomes but, to the best of our knowledge, no studies explore how this relationship has changed over time. We explore the relationship between racial residential segregation on black and white birth weights for the period 1970-2010. We find a negative effect of segregation on black birth outcomes that only emerges after 1980. We explore the potential pathways through which segregation influenced black birth outcomes and how these mechanisms may have changed over time. Measures for maternal socioeconomic status and behaviors accounts for 35 to 40 percent of the full segregation effect between 1990 and 2010. Single-motherhood and mother's education, and unobservable factors that load onto these variables, play important and increasing roles. After controlling for MSA and parent characteristics, segregation explains 21-25 percent of the raw black-white gap in low birth weight between 1990 and 2010.
    Keywords: Racial segregation, residential segregation, low birth weight, infant health
    JEL: I14 J13 J15 R23
    Date: 2019–05–16
  6. By: Bhalotra, Sonia; Karlsson, Martin; Nilsson, Therese; Schwarz, Nina
    Abstract: We identify earnings impacts of exposure to an infant health intervention in Sweden, using individual linked administrative data to trace potential mechanisms. Leveraging quasi-random variation in eligibility, we estimate that exposure was associated with higher test scores in primary school for boys and girls, with a different distribution of gains, only girls being more likely to score in the top quintile. Subsequent gains, in secondary schooling, employment, and earnings, are restricted to girls. We argue that the differential gains for women accrued from both skills and opportunities, expansion of the welfare state having created unprecedented employment opportunities for women.
    Date: 2019–05–27
  7. By: Olesya Fomenko; Jonathan Gruber
    Abstract: We examine how consumers respond to being effectively double insured under two systems: group health (GH) and workers’ compensation (WC). Many GH plans have substantial consumer cost-sharing burden, while WC coverage has no cost-sharing for medical services for work-related injuries. As a result, a consumer facing a large deductible under their group health plan will have a strong financial incentive to make a claim under WC instead. We use a unique data set of claims under both GH and WC to study how “case shifting” to WC responds to GH deductibles for the most common set of injuries that are covered under both types of insurance. We identify the impact of case shifting by using interactions of deductible levels and previous spending. We find that a typical claim is about 1.4 percentage points (5.3%) more likely to be filed as a WC claim when facing an average deductible (about $630) compared to a plan with no deductible, and that total WC costs in the U.S. are more than $1.2 billion higher as a result. At the same time, we find that consumers do not appear to be forward looking, focusing on the “spot price” rather than the full “end of year price” in deciding whether to claim under WC.
    JEL: H51 I18 I28
    Date: 2019–05
  8. By: Gary Charness (Department of Economics, University of California at Santa Barbara); Thomas Garcia (Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France; QuBE - School of Economics and Finance, QUT, Brisbane, Australia); Theo Offerman (CREED and Tinbergen Institute, University of Amsterdam, Amsterdam, Netherlands); Marie Claire Villeval (Univ Lyon, CNRS, GATE UMR 5824, F-69130 Ecully, France; IZA, Bonn, Germany)
    Abstract: We consider the external validity of laboratory measures of risk attitude. Based on a large-scale experiment using a representative panel of the Dutch population, we test if these measures can explain two different types of behavior: (i) behavior in laboratory risky financial decisions, and (ii) behavior in naturally-occurring field behavior under risk (financial, health and employment decisions). We find that measures of risk attitude are related to behavior in laboratory financial decisions and the most complex measures are outperformed by simpler measures. However, measures of risk attitude are not related to risk-taking in the field, calling into question the methods currently used for the purpose of measuring actual risk preferences. We conclude that while the external validity of measures of risk attitude holds in closely related frameworks, this validity is compromised in more remote settings.
    Keywords: Risk preferences, elicitation methods, lab-in-the-field experiment
    JEL: C91 C93 D81
    Date: 2019
  9. By: Deborah A. Cobb-Clark; Sarah Dahmann; Nathan Kettlewell
    Abstract: Depression affects the way that people process information and make decisions, including those involving risk and uncertainty. Our objective is to analyze the way that depressive episodes shape risk preferences and risk-taking behaviors. We are the first to address this issue using large-scale, representative panel data that include both behavioral and stated risk preference measures and a theoretical framework that accounts for the multiple pathways through which depression affects risk-taking. We find no disparity in the behavioral risk preferences of the mentally well vs. depressed; yet depression is related to people’s stated risk preferences and risk-taking behaviors in ways that are context-specific. Those who are likely to be experiencing a depressive episode report less willingness to take risks in general, but more willingness to take health risks, for example. We investigate these patterns by developing a conceptual model — informed by the psychological literature — that links depression to risk-taking behavior through the key elements of a standard intertemporal choice problem (e.g., time preferences, expectations, budget constraints). This motivates a mediation analysis in which we show that differences in risk-taking behavior are largely explained by depression-related disparities in behavioral traits such as locus of control, optimism and trust. Overall, we find that there is no overarching tendency for those who are depressive to engage in either more or less risk-taking. Instead, the decision-making context matters in ways that largely align with our theoretical expectations.
    Keywords: Risk preferences, depression, mental health, risk-taking
    JEL: D91 I12 D14
    Date: 2019
  10. By: Böckerman, Petri (Labour Institute for Economic Research); Conlin, Andrew (Oulu Business School); Svento, Rauli (Oulu Business School)
    Abstract: To examine the relationship between early health status and financial decisions in adulthood, we link information on birth weight in 1966 from the Northern Finland Birth Cohort to data from the Finnish Central Securities Depository over the period of 1995-2010. We find that persons predisposed to poor health status in early childhood (indicated by low birth weight) avoid participating in the stock market in adulthood. The link between birth weight and stock market participation is partially explained by the fact that poor early health status leads to risk aversion. Early health status is not significantly related to the portfolio's value-growth tilt.
    Keywords: health status, birth weight, stock market participation
    JEL: I10 G11
    Date: 2019–05
  11. By: Silvia Loi (Max Planck Institute for Demographic Research, Rostock, Germany); Joonas Pitkänen; Heta Moustgaard; Mikko Myrskylä (Max Planck Institute for Demographic Research, Rostock, Germany); Pekka Martikainen (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: Children of first-generation immigrants tend to have better health than the native population, but over generations, the health advantage of immigrant children deteriorates. It is, however, poorly understood how family resources can explain health assimilation, whether the process of assimilation varies across health conditions, and where on the generational health assimilation spectrum children with one immigrant and one native parent (exogamous families) lie. We seek to extend our understanding of the process of health assimilation by analyzing the physical and mental health of immigrant generations, assessing the role of exogamous family arrangements, and testing the contribution of family material and social resources on the offspring’s outcomes. We use register-based longitudinal data from a 20% random sample of Finnish households with children born in years 1986-2000, free of reporting bias and loss to follow-up. We estimate the risk of being hospitalized for somatic conditions, psychopathological disorders, and injuries by immigrant generation status. Our results show a negative health assimilation process with higher prevalence of physical and, in particular, mental health problems among second-generation immigrant children than among native children, and to first-generation immigrant children, that is only partially explained by family resources. We find that the children of exogamous families are at especially high risk of developing psychopathological disorders. These results provide strong support for the hypothesis that children of exogamous families constitute a specific health risk group, especially for psychopathological disorders, and that the role of the family seems to be is secondary to other unobserved factors.
    Keywords: Finland
    JEL: J1 Z0
    Date: 2019–05
  12. By: Gutierrez, Federico H.
    Abstract: Family structure is usually believed to affect children's human capital. Is it possible that causality goes in the opposite direction? This paper shows that the behavior of family structure variables over the life cycle dramatically changes when women have babies in their forties. These data regularities align with a significant increase in the risk of having a child with health problems when women enter the last decade of their reproductive life. I present a simple theoretical model that provides a common underlying explanation for the data patterns and generates additional testable implications. I estimate the model predictions using ACS data.
    Keywords: child health,family structure,advanced maternal age
    JEL: J12 J13 I12
    Date: 2019
  13. By: Jakob Everding; Jan Marcus
    Abstract: Although unemployment likely entails various externalities, research examining its spillover effects on spouses is scarce. This is the first paper to estimate effects of unemployment on the smoking behavior of both spouses. Using German Socio-Economic Panel data, we combine matching and difference-in-differences estimation, employing the post-double-selection method for control-variable selection via Lasso regressions. One spouse’s unemployment increases both spouses’ smoking probability and intensity. Smoking relapses and decreased smoking cessation drive the effects. Effects are stronger if the partner already smokes and if the male partner becomes unemployed. Of several mechanisms discussed, we identify smoking to cope with stress as relevant.
    Keywords: smoking, risky health behaviors, unemployment, job loss, spillover effects, post-double-selection method
    JEL: I12 J63 J65 C23
    Date: 2019
  14. By: Popov, Vladimir
    Abstract: The relationship between inequality and happiness is counterintuitive. This applies to both inequality in income and wealth distribution overall and also inequality at the very top of the wealth pyramid, as measured by billionaire intensity (the ratio of billionaire wealth to GDP). First, billionaire intensity appears to be higher in countries with low, not high, levels of income inequality. Second, happiness indices are higher in countries with high percentages of billionaire and millionaire wealth as a proportion of GDP, but with low levels of income inequality. This paper uses databases from the Forbes billionaires list, the Global Wealth Report (GWR), and the World Happiness Report, as well as from the World Database on Happiness. Using these datasets, I examine the relationship between income inequality and happiness for over 200 countries from 2000 to 2018. It turns out that in relatively poor countries – below $20,000-$30,000 per capita income – inequality raises happiness rather than lowers it, but inequality has a negative impact on happiness in rich countries. A certain degree of inequality of wealth and income distribution has a positive impact on happiness feelings, especially in countries with low levels of income. Furthermore, wealth inequalities, and especially the degree of concentration of wealth at the very top of the wealth pyramid, raise happiness self-evaluations even when income inequalities lower it.
    Keywords: Inequality in income and wealth distribution, share of billionaires’ and millionaires’ wealth in GDP, happiness indices; inequality in income and wealth distribution, share of billionaires’ and millionaires’ wealth in GDP, happiness indices
    JEL: D31 D63 I31
    Date: 2019–05–21
  15. By: Schmeck, Maren Diane (Center for Mathematical Economics, Bielefeld University); Schmidli, Hanspeter (Center for Mathematical Economics, Bielefeld University)
    Abstract: We consider the surplus process of a life insurer who is able to buy a securitisation product to hedge mortality in a discrete time framework. Two cohorts are considered: one underlying the securitisation product and one for the portfolio of the insurer. In our main result we show that there exists a unique strategy that maximises the expected utility of the insurer. Our findings are illustrated by a tractable model for mortality catastrophe risk.
    Keywords: mortality option, optimal strategy, maximal utility, ex- ponential utility
    Date: 2019–05–28
  16. By: Bhalotra, Sonia; Rocha, Rudi
    Abstract: Although understanding the role of health in driving labor market outcomes is a matter of great importance, it has proven difficult to isolate this effect due to empirical challenges and a lack of compelling sources of identification. We obtain causal estimates of the effect of health on income and welfare dependency through two different channels: a negative health shock (dengue outbreak) and a positive health shock (opening of a health-care facility). To do this, we rely on instrumental variables and difference-in-difference methods, as well as on novel datasets. We find that dengue outbreaks lower the average working hours and income. This effect is particularly high for low-income individuals, but conditional cash transfer programs can insulate them from this shock. On the other hand, the opening of a new health-care facility in a families catchment area rises family per capita income and employment. All together, this evidence suggest that health shocks are an important part of income, poverty and welfare dependency.
    Date: 2019–05–23
  17. By: Akinwande Atanda; W. Robert Reed (University of Canterbury)
    Abstract: In his 2008 Journal of Health Economics paper, Jochen Hartwig claimed that Baumol’s Cost Disease (BCD) theory could explain observed increases in health care expenditures in OECD countries. This paper replicates Hartwig’s results and demonstrates that he tested the wrong hypothesis. When one tests the correct hypothesis, Hartwig’s conclusions are not supported. Rather than providing evidence in favor of BCD, Hartwig’s estimation procedures, when applied correctly, strongly reject BCD as an explanation for health expenditure increases for the OECD data he examined.
    Keywords: Baumol's cost disease, health care expenditures, health care costs, OECD, panel data
    JEL: I11 J30 E24
    Date: 2019–05–01
  18. By: Costa-Font, Joan; Hernández-Quevedo, Cristina; Sato, Azusa
    Abstract: The distribution of income related health inequalities appears to exhibit changing patterns when both developing countries and developed countries are examined. This paper tests for the existence of a health Kuznets' curve, that is an inverse U-shape pattern between economic developments measured by GDP per capita) and income-related health inequalities (as measured by concentration indices). We draw upon both cross section (the World Health Survey) and a long longitudinal (the European Community Household Panel survey) dataset. Our results suggest evidence of a health Kuznets' curve on per capita income. Our findings point towards the existence of a polynomial association where inequalities decline when GDP per capita reaches a magnitude ranging between $26,000 and $38,700.That is, income-related health inequalities rise with GDP per capita, but tail off once a threshold level of economic development has been attained.
    Keywords: concentration indices; self-reported health; health inequalities; Kuznets’ curve; income related health inequalities
    JEL: I18 I3 O1
    Date: 2018–04–01
  19. By: Arkedis, Jean (Harvard Kennedy School); Creighton, Jessica (Harvard Kennedy School); Dixit, Akshay (Harvard Kennedy School); Fung, Archon (Harvard Kennedy School); Kosack, Stephen (Harvard Kennedy School); Levy, Dan (Harvard Kennedy School); Tolmie, Courtney (Harvard Kennedy School)
    Abstract: We assess the impact of a transparency and accountability program designed to improve maternal and newborn health (MNH) outcomes in Indonesia and Tanzania. Co-designed with local partner organizations to be community-led and non-prescriptive, the program sought to encourage community participation to address local barriers in access to high quality care for pregnant women and infants. We evaluate the impact of this program through randomized controlled trials (RCTs), involving 100 treatment and 100 control communities in each country. We find that on average, this program did not have a statistically significant impact on the use or content of maternal and newborn health services, nor the sense of civic efficacy or civic participation among recent mothers in the communities who were offered it. These findings hold in both countries and in a set of prespecified subgroups. To identify reasons for the lack of impacts, we use a mixed-method approach combining interviews, observations, surveys, focus groups, and ethnographic studies that together provide an in-depth assessment of the complex causal paths linking participation in the program to improvements in MNH outcomes. Although participation in program meetings was substantial and sustained in most communities, and most attempted at least some of what they had planned, only a minority achieved tangible improvements and fewer still saw more than one such success. Our assessment is that the main explanation for the lack of impact is that few communities were able to traverse the complex causal paths from planning actions to accomplishing tangible improvements in their access to quality health care.
    Date: 2019–06

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