Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Question
Chapter 3, Problem 10E
To determine
Check whether the statement is true or false.
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Students have asked these similar questions
The Grossman model emphasizes the important roles that education, health knowledge, and expectations about future income and health play in the choices that determine health in both the short and long runs. Education both increases the likelihood of having higher income, which is good for health, and can compensate for lower income in which of the following ways:
a.
Education is associated with better health literacy, knowledge and execution of healthy diets and lifestyles
b.
Education enables people to communicate better with well-educated doctors and so they learn better how to manage their own health over time
c.
Education enables people to read about side effects and avoid unnecessarily risky procedures
d.
All of the above
e.
None of the above
Indicate whether the statement is true or false, and justify your answer.According to the hot-brain/cold-brain model, individuals usually have time-consistent preferences but sometimes lapse momentarily into a time-inconsistent frames of mind.
Which of the following economic models is useful
for examining the effects of drinking on cancer
likelihood
exercise = f (drinker, age, education, employment)
cancer likelihood = f (drinker, age, exercise,
education)
cancer likelihood = f (age, exercise, education,
employment)
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- True or false? According to the Grossman model, if a new drug were discovered that eliminated the steady deterioration of health that accompanies aging – but does not eliminate sudden events like heart attacks or being hit by a bus – then the demand for jelly donuts, french fries, and physical activity in the presence of buses would decline. Justify your answer.arrow_forwardHealth insurance is normally seen as a good that is most valuable to sick people, since health expenditures are highest for the sick. Yet, in the basic insurance model discussed in this chapter, actuarially-fair health insurance is worth nothing to people who are certain to become sick (p = 1). Why does the standard model produce this result? How is this different from the way real-world insurance markets work?arrow_forwardIndicate whether the statement is true or false, and justify your answer.In real life, investments in health can generate long-lasting benefits, but the Grossman model neglects this aspect of health.arrow_forward
- There are four key relationships upon which the Standard Model is based. Please list each of the four relationships and give one example for eacharrow_forwardIndicate whether the statement is true or false, and justify your answer.The Rothschild–Stiglitz model predicts that people who own life insurance should have fewer unobserved traits (that is, unobserved by insurance companies) that lead to a higher risk of death when compared against people with the same level of income but who do not own life insurance.arrow_forwardIndicate whether the statement is true or false, and justify your answer.In the framework of the Grossman model, an individual’s level of health is completely controlled by her actions. Thus, in any given period, an individual is unconstrained in her choice of health status.arrow_forward
- Indicate whether each of the following examples of behavior is consistent with the way the traditional econiomic framework suggests people should act, or whether it is reserved for behavioral economists to examine. Consistent with the Predictions of Traditional Economic Models Reserved for Behavioral Economics Example Some people would be willing to make a large sacrifice in order to help a loved one. Some people care about how much money they make relative to other people rather than their absolute level of income. Some people treat $95 they earn differently from $95 they win in a random drawing. Some people choose to work fewer hours after receiving a raise at work.arrow_forwardCan Granger causality produce false positive or false negative results?arrow_forwardWhat are the shortcomings of the grossman modelarrow_forward
- Our earlier model focused on the most basic trade-off introduced by the policy. One aspect of the policy that is also heavily debated is the fact that not every household can afford to upgrade their car in order to avoid paying the ULEZ fees. We now want to understand how best to design the scrappage scheme, which subsidises changing cars for those who need it the most. In particular, we want to know whether the scrappage scheme can create a moral hazard problem. To guide our analysis, consider the following simple model. The government would like to introduce a subsidy to help citizens who need their car for work and cannot afford to buy a ULEZ-compliant car. It also wants to ensure that only citizens who need to drive their car regularly use the subsidy. Instead of the two groups of citizens discussed above, we focus on one particular citizen who does not drive very often, only once a year. As a result, this citizen does not emit excessive pollution even with a car that is not…arrow_forwardOur earlier model focused on the most basic trade-off introduced by the policy. One aspect of the policy that is also heavily debated is the fact that not every household can afford to upgrade their car in order to avoid paying the ULEZ fees. We now want to understand how best to design the scrappage scheme, which subsidises changing cars for those who need it the most. In particular, we want to know whether the scrappage scheme can create a moral hazard problem. To guide our analysis, consider the following simple model. The government would like to introduce a subsidy to help citizens who need their car for work and cannot afford to buy a ULEZ-compliant car. It also wants to ensure that only citizens who need to drive their car regularly use the subsidy. Instead of the two groups of citizens discussed above, we focus on one particular citizen who does not drive very often, only once a year. As a result, this citizen does not emit excessive pollution even with a car that is not…arrow_forwardYou must have learned that we cannot be always rational decision maker. Now, Tell us specifically about your experience when you made a nonrational decision making. How does this decision-making align with the satisfying model and the intuition model? (Show an example for both models) Satisficing model Intuition modelarrow_forward
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