nep-hea New Economics Papers
on Health Economics
Issue of 2019‒11‒04
eight papers chosen by
Nicolas R. Ziebarth
Cornell University

  1. Demand Conditions and Worker Safety: Evidence from Price Shocks in Mining By Kerwin Kofi Charles; Matthew S. Johnson; Melvin Stephens Jr.; Do Q. Lee
  2. Be Cautious with the Precautionary Principle: Evidence from Fukushima Daiichi Nuclear Accident By Matthew J. Neidell; Shinsuke Uchida; Marcella Veronesi
  3. Accounting for fetal origins: Health capital vs. health deficits By Dalgaard, Carl-Johan; Hansen, Casper Worm; Strulik, Holger
  4. Fair Long-Term Care Insurance By Marie Louise Leroux; Pierre Pestieau; Grégory Ponthière
  5. Spending Reductions in the Medicare Shared Savings Program: Selection or Savings? By J. Michael McWilliams; Laura A. Hatfield; Bruce E. Landon; Michael E. Chernew
  6. Does unemployment worsen babies' health? A tale of siblings, maternal behaviour and selection By De Cao, Elisabetta; McCormick, Barry; Nicodemo, Catia
  7. Defining and measuring health poverty By CLARKE, Philip; ERREYGERS, Guido
  8. Evaluating water- and health related development projects: A cross-project and micro-based approach By Christina Greßer; David Stadelmann

  1. By: Kerwin Kofi Charles; Matthew S. Johnson; Melvin Stephens Jr.; Do Q. Lee
    Abstract: We investigate how demand conditions affect employers' provision of safety - something about which theory is ambivalent. Positive demand shocks relax financial constraints that limit safety investment, but simultaneously raise the opportunity cost of increasing safety rather than production. We study the U.S. metals mining sector, leveraging exogenous demand shocks from short-term variation in global commodity prices. We find that positive price shocks substantially increase workplace injury rates and safety regulation non-compliance. While these results indicate the general dominance of the opportunity cost effect, shocks that only increase mines' cash-flow lower injury rates, illustrating that financial constraints also affect safety.
    JEL: J23 J28
    Date: 2019–10
  2. By: Matthew J. Neidell; Shinsuke Uchida; Marcella Veronesi
    Abstract: This paper provides a large scale, empirical evaluation of unintended effects from invoking the precautionary principle after the Fukushima Daiichi nuclear accident. After the accident, all nuclear power stations ceased operation and nuclear power was replaced by fossil fuels, causing an exogenous increase in electricity prices. This increase led to a reduction in energy consumption, which caused an increase in mortality during very cold temperatures. We estimate that the increase in mortality from higher electricity prices outnumbers the mortality from the accident itself, suggesting the decision to cease nuclear production has contributed to more deaths than the accident itself.
    JEL: I12 K32 Q41
    Date: 2019–10
  3. By: Dalgaard, Carl-Johan; Hansen, Casper Worm; Strulik, Holger
    Abstract: The fetal origins hypothesis has received considerable empirical support, both within epidemiology and economics. The present study compares the ability of two rival theoretical frameworks in accounting for the kind of path dependence implied by the fetal origins hypothesis. We argue that while the conventional health capital model is irreconcilable with fetal origins of late-in-life health outcomes, the more recent health deficit model can generate shock amplification consistent with the hypothesis. We also develop a theory of ontogenetic growth in utero and during childhood, unify it with the theory of adult aging, and discuss the transmission of early-life shocks to late-life health deficit accumulation.
    Keywords: Fetal Origins,Health Capital,Health Deficits,Ontogenetic Growth,In Utero Development
    JEL: I10 J13 D91
    Date: 2019
  4. By: Marie Louise Leroux; Pierre Pestieau; Grégory Ponthière
    Abstract: The study of optimal long-term care (LTC) social insurance is generally carried out under the utilitarian social criterion, which penalizes individuals who have a lower capacity to convert resources into well-being, such as dependent elderly individuals or prematurely dead individuals. This paper revisits the design of optimal LTC insurance while adopting the ex post egalitarian social criterion, which gives priority to the worst-o¤ in realized terms (i.e. once the state of nature has been revealed). Using a lifecycle model with risk about the duration of life and risk about old-age dependence, it is shown that the optimal LTC social insurance is quite sensitive to the postulated social criterion. The optimal second-best social insurance under the ex post egalitarian criterion involves, in comparison to utilitarianism, higher LTC benefits, lower pension benefits, a higher tax rate on savings, as well as a lower tax rate on labor earnings.
    Keywords: Long-Term Care,Social Insurance,Fairness,Mortality,Compensation,Egalitarianism,
    JEL: J14 I31 H55
    Date: 2019–10–21
  5. By: J. Michael McWilliams; Laura A. Hatfield; Bruce E. Landon; Michael E. Chernew
    Abstract: Evidence of patient and physician turnover in accountable care organizations (ACOs) has raised concerns that ACOs may be earning shared-savings bonuses by selecting for lower-risk patients or providers with lower-risk panels. We conducted three sets of analyses to examine risk selection in the Medicare Shared Savings Program. First, we estimated overall MSSP savings through 2015 using a difference-in-differences approach and methods that eliminated selection bias from ACO program exit or changes in the practices or physicians included in ACO contracts. We then checked for residual risk selection at the patient level. Second, we re-estimated savings with methods that address undetected risk selection but could introduce bias from other sources. These included patient fixed effects, baseline assignment, and area-level MSSP exposure to hold patient populations constant. Third, we tested for changes in provider composition or provider billing that may have contributed to bonuses, even if they were eliminated as sources of bias in the evaluation analyses. We find that MSSP participation was associated with modest and increasing annual gross savings in the 2012-2013 entry cohorts of ACOs that reached $139-302/patient by 2015. Savings in the 2014 entry cohort were small and not statistically significant. Robustness checks revealed no evidence of residual risk selection. Alternative methods to address risk selection produced consistent results but were less robust than our primary analysis, suggesting the introduction of bias from within-patient changes in time-varying characteristics. We find no evidence of ACO manipulation of provider composition or billing to inflate savings. We further demonstrate that exit of high-risk patients or physicians with high-risk patients from ACOs is misleading without considering a counterfactual among non-ACO practices. We conclude that participation in the original MSSP program was associated with modest savings and not with favorable risk selection. These findings suggest an opportunity to build on early progress. Understanding the effect of new incentives and opportunities for risk selection in the revamped MSSP will be important for guiding future program reforms.
    JEL: I11 I13
    Date: 2019–10
  6. By: De Cao, Elisabetta; McCormick, Barry; Nicodemo, Catia
    Abstract: We study the effect of unemployment on birth outcomes by exploiting geographical variation in the unemployment rate across local areas in England, and comparing siblings born to the same mother via family fixed effects. Using rich individual data from hospital administrative records between 2003 and 2012, babies’ health is found to be strongly procyclical. A one-percentage point increase in the unemployment rate leads to an increase in low birth weight and preterm babies of respectively 1.3 and 1.4%, and a 0.1% decrease in foetal growth. We find heterogenous responses: unemployment has an effect on babies’ health which varies from strongly adverse in the most deprived areas, to mildly favourable in the most prosperous areas. We provide evidence of three channels that can explain the overall negative effect of unemployment on new-born health: maternal stress; unhealthy behaviours - namely excessive alcohol consumption and smoking; and delays in the takeup of prenatal services. While the heterogenous effects of unemployment by area of deprivation seem to be explained by maternal behaviour. Most importantly, we also show for the first time that selection into fertility is the main driver for the previously observed, opposite counter-cyclical results, e.g., Dehejia and Lleras-Muney (2004). Our results are robust to internal migration, different geographical aggregation of the unemployment rate, the use of gender-specific unemployment rates, and potential endogeneity of the unemployment rate which we control for by using a shift-share instrumental variable approach
    JEL: E24 I10 I12
    Date: 2019–08
  7. By: CLARKE, Philip; ERREYGERS, Guido
    Abstract: The aim of the paper is twofold: first we elaborate how the concept of ‘health poverty’ can be defined and measured, and second we apply the methodology to study health poverty in a variety of cases. Although not entirely new, the notion of health poverty is seldom used – in contrast to the notion of income poverty. In our view a particular poverty concept focusing on health is useful and relevant, especially for public health policy. The measurement of health poverty allows us to gain insights into different sorts of health deprivation in society as a whole, and in specific subgroups. Perhaps the main reason why there exist relatively few studies on health poverty is that in comparison to income, health is multifaceted and therefore much harder to measure accurately. The first choice to be made is that of the health variable which will be taken into consideration. We will look at three different variables, all of which are assumed to have ratio-scale properties. This means that we can calculate the distance of everyone’s health achievement from a given threshold level and compare the differences between individuals. We are then in a position to measure health poverty by means of the now widely adopted Foster-Greer-Thorbecke (FGT) class of poverty indicators. In our application we look at poverty with respect to cardiovascular risk, general health status, and life expectancy. As far as we can see, this approach has never been followed before. The FGT class of poverty measures includes a poverty aversion parameter. Different values of the parameter will be assumed in order to assess three aspects of poverty (incidence, intensity and inequality, known as the three I’s of poverty measurement). Moreover, the FGT class is additively decomposable, which makes it possible to gauge the contribution of poverty within specific subgroups to overall poverty.
    Date: 2018–11
  8. By: Christina Greßer; David Stadelmann
    Abstract: We present a new micro-based approach to evaluate the effect of water- and health-related development projects. We collect information from 1.8 million individuals from DHS clusters (Demographic and Health Surveys) in 38 developing economies between 1986 and 2017. By geocodes, we combine cluster information with over 14,000 sub-national projects from the World Bank. We then investigate the impact of the projects employing fixed-effects estimation techniques. Our findings indicate that the time to gather water and child mortality tend to decrease when projects are realized. The quality of drinking water and sanitation facilities are positively affected too by projects. Our data allows us to account for cluster heterogeneity, which is a significant extension to the cross-country literature. Robustness checks, covering data and methodological refinements, supports our main findings.
    Keywords: Evaluation; development projects; drinking water; sanitation; child mortality
    JEL: O10 O22 R11
    Date: 2019–10

This nep-hea issue is ©2019 by Nicolas R. Ziebarth. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.