Yonatan Ben-Shalom, Robert Moffitt, and John Karl Scholz
Robert H. Nelson
This article surveys what has been a leading development for American housing and local governance of the past half century: the meteoric rise of community associations. These quasi-government organizations usually are created by land developers and, as the new communities are developed, they evolve into self-governing entities owned by the homeowners and provide an extensive array of local services. In 2010 there were more than three hundred thousand community associations, which housed more than 60 million Americans, or 20 percent of the US population. (This is in contrast to the approximately ninety thousand local governments in the United States.) The growth of these associations has been rapid: between 1980 and 2000, half of the new housing in the United States was built and organized under the private governance of a community association. Most of that growth occurred in the sunny and sandy regions of the West and the South.
Jan Abel Olsen
This article describes the various concepts of equity and fairness that have been developed by economists in health and health care. It begins with a background framework on the principal causes of inequalities in health and health care. It is concerned with equity issues and theories of distributive justice being integrated into health economic models. The discussion of “paradigm of the health frontier” brings equity and efficiency together. It enquires what the key question of equality in terms of stream of health is and is concerned with the equality of opportunities or equality of outcomes. This issue is strongly related to the intricate issue of “personal responsibility.” The renewed interest in the literature on the distinction between equality of opportunity and equality of outcomes, as well as in the notion of responsibility, represents an attempt to clarify the reasons why one type of inequality can be labeled fair, while another be unfair. Finally, the article draws some implications.
Michael Baker and Mark Stabile
This article reviews the empirical studies to examine the validity of the notion that health in childhood has both short-term and longer-term economic consequences, and that childhood health is itself a function of a broader set of policies, investment decisions and parental choices, and a function of parental health stock and economic background. Economic research on the relationship between child mental health and economic outcomes is discussed in three categories. The article also includes the role that maternal behavior plays in the development of child health and behavior. It further examines the relationship between maternal substance abuse and child mental health as measured by a behavioral problems index. This article describes the determinants and role of investments in child health on later outcomes. It also identifies some priorities for future research.
This article attempts to take on the policy issues and explores the economic analysis of prevention that can add to policy development. It discusses prevention and draws on the economic concepts of human capital and utility maximization. It provides a framework for investigating the reasons for people making the decisions and their response if their incentives or constraints alter. This approach can yield useful insights into behavior and answer various questions such as the reasons for smoking and the rise in the obesity level. Thus economic analysis can provide a basis for designing prevention strategies. This article addresses the issue of whether there is a current under-investment in prevention. For many policymakers and public health advocates, this question is about whether more prevention will save on care expenditure. Furthermore, the article turns to the special challenges in building an evidence base for prevention policy.
Richard G. Frank
This article notes that problems of incomplete information are particularly salient in the context of mental health. It considers how different nations address economics and mental health in the formulation of mental health policy. It focuses on three key economic phenomena that are central to understanding the allocation of resources to the treatment of mental disorders. These are externalities, methods for efficient rationing of health resources, and incentives for allocating funds across different types of mental health services. This article provides some background on mental disorders and organization of mental health care in different OECD countries. It considers determination of mental health spending as part of health care rationing schemes in various nations. It discusses the role of government and how each country aligns its financing arrangements with stated policy goals of reducing reliance on institutional care for people with mental illnesses. Finally, it offers some concluding observations on mental health policy.
Donald S. Kenkel and Jody Sindelar
This article attempts to provide an overview of the response of economic research on unhealthy substances to these challenges and opportunities. It devotes considerable attention to new econometric methodologies that have been used to assess the causal determinants of dangerous behavior. It introduces models, which economists use to understand consumers' use of unhealthy substances, and discusses the economic approach to substance use policy. It provides an overview of some of the interesting questions being asked in modern empirical research. Numerous reviews for policy relevant findings such as the price-elasticity of the demand for cigarettes and alcohol are discussed. This article complements such reviews and offers a critical perspective on the research challenges behind empirical estimates of even apparently simple economic concepts.
Ramanan Laxminarayan and Anup Malani
Infectious diseases remain a central preoccupation in many countries. This article sets out the economic issues that arise in this highly complex domain. It reviews four main strands of literature on the economics of infectious diseases. It discusses the economic impact of infectious diseases on labor productivity and investment decisions. It focuses on the interplay between disease prevention and treatment and individual risk-taking behavior. It discusses vaccination as an important tool in the prevention of infectious diseases and presents a classic public goods problem. Disease reporting and eradication efforts are also global public goods. A fourth strand of literature is on the optimal design and allocation of resources for prevention and treatment programs. These programs are based on epidemiological models of disease spread that present significant mathematical challenges.
Patricia M. Danzon
This article summarizes the literature, and considers the issue of paying for research and development. It reviews research and development costs, regulation, productivity and incentives for innovation. It discusses market demand and pricing, effects of insurance, reimbursement regulation, alternatives to patents, and generics. Further, it reviews trends in promotion, regulation of promotion and its effects. It discusses global issues, including differential pricing and R&D for neglected diseases. The focus is on the US, as the home of the largest number of multinational pharmaceutical and smaller biotech companies. This article notes the important differences in regulatory and reimbursement systems in other countries. Finally it suggests that although there is large and growing literature on the pharmaceutical industry that has produced valuable information, important issues remain for future research.
Till Bärnighausen and David E. Bloom
This article addresses the role of the workforce in achieving health goals in developing country contexts. It reviews the health economics and health systems literature on the health workforce. It organizes the review according to three perspectives on health workers, which correspond roughly to chronological phases of academic publication: health workforce planning, the health worker as economic factor, and the health worker as necessary resource. This article describes the health policy backgrounds that led to each phase of research and then reviews relevant literature. However, the perspectives are useful in framing past research, structuring our exposition, and laying out a research agenda on the health workforce for coming years. It further discusses opportunities for future research on the health workforce abound and suggests that the transfer of existing approaches could lead to important insights.
Wynand P. M. M. Van De Ven and Frederik T. Schut
Michael E. Chernew and Dustin May
Health care cost growth is among the most important issues facing the United States and other developed countries. This article describes the rapid growth in expenditure in most developed countries, and discusses the factors that have driven this growth, such as population aging, general economic growth, and the adoption and use of new medical technologies. The public financing aspect of health care spending adds an additional dimension to assessing the impact of rapid health care cost growth. The article considers a range of strategies for slowing cost growth, including economic evaluation of technologies. Most health care systems employ some method of cost sharing as a means to reduce health care utilization. This article also discusses managed care plans that integrate the financing and delivery of care. However, as costs grow, pressures to control spending will grow and distributional issues will become even more salient.
Alan Maynard and Karen Bloor
This article surveys the successes and lacunae of the health economics research endeavor. It points to the key role that funding agencies have in directing research attention towards particular domains, but argues that the discipline has in recent years become more balanced in seeking to offer policy advice on most of the important elements of the health system. Health economics has some notable successes in influencing public policy for the good, for example in the design of payment mechanisms, the measurement of performance, and the assessment of health technology. The article mentions the importance of proselytizing to ensure continued research funding and continued improvements in the efficient delivery of population health care. This overview highlights a number of success stories from health economics, but also areas where there is a need to continue to develop and improve the evidence base. The trademarks of economics and measurement will continue to facilitate improved efficiency, equity, and macroeconomic expenditure control in future.
This article deals with the question of how a public decision maker should think about issues of known and unknown risks. The optimal investment levels are then derived and compared for a number of different decision rules. It discusses three decision rules: the best guess, the maximin, and the expected value decision rules. It presents the St Petersburg paradox, which clearly shows that the expected value decision rule cannot be universally applied and introduces a non-linear utility function to the model. It discusses the optimal investment rules for a special case of a state-dependent expected utility model. This article then presents another paradox, the Ellsberg paradox. It deals with the problem of unknown probabilities by adding probability distributions of the probabilities. Decision rules for three different models that allow for ambiguity aversion are then derived and discussed. The article returns to the more fundamental question regarding whether models of ambiguity aversion can be justified for normative analysis.
This article presents the economic theory of health production, which envisions health as a capital stock to education or human capital. It provides a comprehensive account of the dominating theoretical model of individual health-related behavior: the demand-for-health model. It briefly discusses some of the theoretical extensions of the model. This article provides empirical evidence with regard to the demand-for-health model, and identifies relevant areas for the success of public policy efforts in the area of health. It emphasizes the similarities between health capital and human capital and the policy implications of this relationship. This article is devoted to policy issues and begins with a theoretical discussion, which seeks to identify potential policy target-variables and the effect of those variables on individual health and health-related behavior. It ends with a discussion of future developments required.
Jack E. Triplett
This article considers approaches to tracking changes in the productivity of a health care system over time. Economists generally believe that measured productivity growth in the sector is biased downward because of difficulties in measuring medical care output accurately and also that measurement errors are pervasive in some of the inputs. This article discusses the most essential tasks of getting the data right in all productivity measurement. It also discusses some of the economic implications of the fact that medical care, though it is demanded to improve health, does not, by itself, produce health. It considers an alternative concept for medical care output and necessity to separate trends in medical care expenditures into trends in quantities of treatments and prices or costs of treatments. Improving the database for the analysis of medical care productivity deserves high priority because vital questions of health care policy demand exactly the same data.
Bianca K. Frogner, Peter S. Hussey, and Gerard F. Anderson
This article focuses on the health systems of industrialized countries which are members of the Organization for Economic Co-operation and Development (OECD). It begins with an overview of the various ways to finance health systems in industrialized countries. It discusses the factors generally considered to be the major factors contributing to rising health care spending and the variation in the levels of health care spending across the OECD countries. However, many of the fundamental drivers of health spending growth are shared across countries: most notably, technological diffusion and the shift of the disease burden toward chronic diseases. This article determines successful approaches to manage these drivers of spending while improving the quality and outcomes achieved should be a priority for OECD countries.
Pedro Pita Barros and Pau Olivella
Darius N. Lakdawalla and Neeraj Sood
Efficient innovation policy requires decoupling of the innovator's private rewards from consumer prices, and instead tying them to the marginal social value of the invention. This is not easy to achieve, but movement toward this goal can be effected through a mix of policy instruments. This article develops this thesis by drawing on the existing theoretical and empirical literature on innovation. It begins with the canonical positive model of innovative activity, along with its various extensions, weaknesses, and criticisms. It then turns to the empirical literature testing and quantifying the implications of this theory and its variants. Next, it moves to the normative implications of economic theory and describes how the empirical literature sheds light on the nature and degree of inefficiency in the discovery and dissemination of innovative goods. Finally, it characterizes various policy approaches to ameliorating these inefficiencies at their root.