Health Economics
14th Edition
ISBN: 9781137029966
Author: Jay Bhattacharya
Publisher: SPRINGER NATURE CUSTOMER SERVICE
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Chapter 4, Problem 3E
To determine
Determine whether the given statement is true or false.
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Indicate whether the statement is true or false, and justify your answer.The thrifty phenotype hypothesis states that early-life events after birth have a strong influence on health status even in adulthood.
According to Barr, the SES into which you were born and spent your childhood has
more predictive power for health as an adult than does your SES category as an
adult.
True
False
Indicate whether each statement is true or false, and justify your answer.The goal of health policy is to maximize health, wealth, and equity.
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- You have been recruited as an expert in health economics to recommend what is the best therapy for a group of patients. In the image below you will find the decision tree showing the probabilities for different health states and outcomes for patients undergoing two possible treatments, No drug therapy and Drug therapy. Based on the expected cost, which therapy would you recommend as the least expensive? Explain how you arrived at your recommendation and show your calculations the space provided. No drug theraphy ? Drug theraphy ? HEALTH STATES PROBABILITIES Remain in Good Health 0.5 Develop disease A 0.2 Develop disease B 0.2 Die 0.1 Remain in Good Health 0.53 Develop disease A 0.16 Develop disease B 0.22 Die 0.09 OUTCOMES (Costs) $0 $400 $300 $200 SO $800 $500 $0arrow_forwardOne hypothesis for exploring socioeconomic status health disparities is the allostatic load hypothesis. This hypothesis states that repeated (or chronic) stress creates a cumulative physiological burden known as allostatic load. The theory predicts that people on the lower end of the socioeconomic status will have a higher allostatic load, negatively impacting health outcomes.In the context of the Grossman model, we could say that individuals with lower levels of stress face a rate of health depreciation and will have optimal health as a result. lower; higher higher; higher lower; lower higher; lower O Oarrow_forwardIndicate whether each statement is true or false, and justify your answer.The value of statistical life (VSL) is a measure of how much money someone would be willing to accept in exchange for dying.arrow_forward
- Indicate whether the statement is true or false, and justify your answer.Body mass index (BMI) is a reliable measure of obesity.arrow_forwardOne of the most robust, fundamental “facts” of health economics is the SES and health gradient. a) Define the SES and health gradient. b) Give three ways in which the SES and health gradient is robust. c) Provide evidence that some of the gradient is correlational (i.e., give a potential confounder) and evidence that the gradient is in fact causal. d) i. Give an interpretation of Figure 1 below in layperson terms. ii. What pattern do you see for men vs women? iii. “The education and mortality gradient does not depend on healthcare spending or whether the country has universal healthcare.” Use Figure 1 to support or refute this claim.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
- In the Grossman model of health production, people maximize lifetime utility overconsumption of health (H) and a composite of all other goods (X). In the model, health is a stockthat evolves over time and depends upon health in the previous period (Ht-1), investments inhealth during the previous period (It-1), and a depreciation rate (γ). The level of health in period tis Ht=(1- γ)Ht-1+It-1.a. Consider two individuals with H=50 in the current period. The two individuals areidentical except that individual A is 20 years old and has a γ of 0.1, while individual B is30 years old and has a γ of 0.2. Explain why it is more difficult for individual B tomaintain the same level of health as individual A.b. Give 2 real-world examples of how an increase in education would improve a person’sproductivity of health investment (I).arrow_forwardThe Grossman model states that health is a capital good that can be carried over from one period to the next. With this in mind, which of the following is most likely true about how the individual will value health in a lifecycle context compared to a one-period model? Individuals tend to value health less in the life cycle context compared to the one period model Individuals tend to value health more in the life cycle context compared to the one period model. not change the emphasis they put on health.arrow_forwardWhich of the following hypotheses argues that a third variable, "patient", determines both health and wealth: Fuchs hypothesis efficient producer hypothesis thrifty phenotype hypothesis allostatic load hypothesis access to care hypothesisarrow_forward
- One major premise of the Rothschild-Stiglitz (RS) model is that there is a perfectly competitive market for health insurance. Suppose instead that the market is not perfectly competitive, and in fact competitor firms have a hard time entering the market. Could a pooling equilibrium occur in this case? What is it about competition that prevents pooling in the RS model? No formal proof is necessary, but do make your reasoning clear. Evaluate the following statement: competition in health insurance markets is harmful.arrow_forwardWhich of the following statements is FALSE regarding the concept of "adverse selection"? Multiple Choice Adverse selection describes a situation where an individual's demand for insurance is positively correlated with the individual's risk of loss. Adverse selection occurs when someone increases their exposure to risk when insured. This can happen, for example, when a person takes more risks because someone else bears the cost of those risks. The relationship between smoking status and mortality provides a good illustration for adverse selection, especially in the case in which a life insurance company did not vary its premiums according to smoking status of its customers. To counter the effects of adverse selection, insurers may offer premiums that are proportional to a customer's risk.arrow_forwardMultiple Choice Adverse selection describes a situation where an individual's demand for insurance is positively correlated with the individual's risk of loss. Adverse selection occurs when someone increases their exposure to risk when insured. This can happen, for example, when a person takes more risks because someone else bears the cost of those risks. The relationship between smoking status and mortality provides a good illustration for adverse selection, especially in the case in which a life insurance company did not vary its premiums according to smoking status of its customers. To counter the effects of adverse selection, insurers may offer premiums that are proportional to a customer's risk.arrow_forward
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