Archive for ‘Health economics’

October 25, 2012

Behavioral hazard in health insurance

Suppose your health insurance becomes more generous, decreasing the proportion of the cost of care for which you are responsible. At the same time, your premium goes up to cover the extra costs faced by your insurer. In standard theory you are better off because you face less financial uncertainty, but you will also tend to consume too much health care because the price you pay is lower than the cost of your treatment. Standard theory suggests that insurance should be designed to optimally trade-off these benefits and costs. But standard theory assumes rationality: suppose instead people systematically make errors when choosing how much health care to consume. Does it make a difference to how we think about health insurance?

In a recently released NBER working paper, “Behavioral hazard in health insurance,” Katherine Baicker, Sendhil Mullainathan, and Joshua Schwartzstein consider behavioral biases that lead people to (specifically, and with loss of generality) underutilize health care. How should we think about designing health insurance in the presence of such biases?

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October 7, 2012

What do we know about the effect of income inequality on health?

This post briefly surveys some of the methods and results in the literature on health and income inequality, closing with some remarks on problems with the existing literature and where future research may take us. It is not intended as anything resembling a comprehensive survey; Lynch et al (2004) provides a useful review of the empirical literature up to that time.

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October 27, 2011

Smoking, health care costs, and imprisoning drug users because they cost us money to imprison

Earlier this week I posted an article on the Globe’s Economy Lab blog on lifestyle and health care costs. Here’s a little more exposition on a couple of key points, phrased a little more formally.

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October 24, 2011

Patient knowledge, antibiotic abuse, and impolite physicians

Antibiotic overuse causes great social harm yet is largely absent from public discussion of drug policy. There is a textbook external effect of an antibiotic prescription: the more antibiotics are used, the higher the risk we all face of resistant infections. As a result, there tends to be too much use of antibiotics. There have been ongoing efforts to reduce use of antibiotics, particularly in the context of treating respiratory infections, in part by educating GPs, the supply side of the relationship, on appropriate use.

In “Patient knowledge and antibiotic abuse: Evidence from an audit study in China” Janet Currie, Wanchuan Lin, and Wei Zhang consider the demand side of the relationship: what is the effect of patient knowledge on antibiotic use?

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September 5, 2011

Trucks and SUVs should be heavily taxed.

Large, heavy vehicles are safe, as everyone knows. If you’re going to be in an accident, would you rather be in a Miata or an Escalade? More large vehicles on the road make us safer, and we should worry about anything which reduces vehicle sizes. Notably, fuel economy standards decrease vehicle size, so we will become less safe as fuel economy standards become more strict. See for example Crandall and Graham (1989).

Or so conventional wisdom goes, but it turns out the truth is more subtle, according to recent research.

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August 22, 2011

Cannabis policy and traffic accidents

Do reductions in enforcement of marijuana prohibition lead to more traffic accidents?

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