Health Economics and Empirical Strategies

Syllabus

Public Economics I, 2013 Fall

- Health Economics and Empirical Strategies

School of Economics, ShanghaiUniversity of Finance and Economics

Professor: Feng Liu

Office: 707 School of EconomicsBuilding

Phone: 65902331

Website: or Blackboard

Email:

Office hours: Thursday 2pm – 4pm or by appointment

Course meetings: Monday8:55am – 11:45am Classroom 4205

Course description: This comprehensive course covers microeconomics theory and its applications to health economics. Topics include consumer demand for health, household production of health, healthy behaviors, rational addiction, and empirical strategies in health economics and policy analysis. The philosophy behind this course is learning by doing. While we will learn the theory of health economics, the formal requirements of the class will consist primarily of problem sets and empirical paper requiring students to analyze real data and practice your own research. Applied work will help you learn the theory behind it.

Prerequisites:Intermediate microeconomics and econometrics

Course requirement:

- Class participation: 20%

- Problem sets: 30%

- Paper: 50%

Statistical analysis software:Stata is widely used by applied economists. It is the only package for which I will provide support. You are free, however, to use any program you wish. Replicability is an important part of the scientific method, and so I will insist that you submit your program codes for all assignments. You can use pull-down menus to play, but your work should be backed up with programs showing exactly what you did to generate your results. You should have one ‘master do-file’ that is capable of replicating every data and analysis step of your completed assignments. While I will not spend much formal class time on the topic, learning to program well is an important objective of this course.

Academic Integrity: The homework assignments in this class are intended as learning experiences, and are notmeant to test what you can do without help from others. Therefore, it is appropriate and evenencouraged for you to discuss them with other students. However, you MUST turn in your ownhomework assignments written in your own words. You may not copy homework from anotherstudent or from a published source or allow others to copy from you.

Course Outline and Reading List:

1. Introduction

- Culyer, Anthony J. And Joseph P. Newhouse (2000).“The State and Scope of Health Economics.”In Anthony Culyer and Joseph Newhouse, editors, Handbook of Health Economics.

- Fuchs, Victor R. (2000), “The future of health economics,”Journal of Health Economics 19, 141-157.

- Kenkel, Donald S (2000). “Prevention.”In Anthony Culyer and Joseph Newhouse, editors.Handbook of Health Economics. Volume 1B, pp. 1675-1720.

+ Introduction to Stata

2. Demand for health

- Grossman, M. (1972), "On the concept of health capital and the demand for health", Journal of Political Economy 80:223-255.

- Grossman, M. (2000), "The human capital model" In Anthony Culyer and Joseph Newhouse, editors. Handbook of Health Economics. Volume 1A, pp. 347-408.

- Kenkel, Donald S. (1995), "Should You Eat Breakfast? Estimates from Health Production Functions," Health Economics Vol. 4(1), February 1995, pp. 15-29.

+ Descriptive analysis: simple test in Stata

+ Propensity Score and Matching

3. Household production of health

- Grossman, M. (2003) “Household Production and health” Review of Economics of the Household 1, 331-342.

- Cawley, John and Feng Liu. (2012) “Maternal Employment and Childhood Obesity: A Search for Mechanisms in Time Use Data” Economics and Human Biology,10(4):352-364.

+ Regression: controlling for observed characteristics

+ Multicollinearity: factor analysis vs principal component analysis

4. Economics of substance abuse

- Becker, Gary S., Michael Grossman and Kevin M. Murphy (1994). “An empirical analysis of cigarette addiction.”American Economic Review 84 (3): 396-418.

- Chaloupka, Frank J. 1991. “Rational Addictive Behavior and Cigarette Smoking,” Journal of Political Economy, 99(4): 722-742.

- DeCicca, Philip, Donald Kenkel, and Alan Mathios (2002), “Putting out the fires: will higher taxes reduce the onset of youth smoking?”Journal of Political Economy 110 (1), 144-169.

- Dee, Thomas (1999), “State alcohol policies, teen drinking, and traffic fatalities,”Journal of Public Economics 72(2), 289-315.

- Kenkel, Donald S. (2005), “Are Alcohol Tax Hikes Fully Passed Through to Prices? Evidence from Alaska.”American Economic Review/ Papers and Proceedings 95 (2): 273-277.

- Liu, Feng. (2010), “Cutting through the Smoke: Separating the Effect of Price on Smoking Initiation, Relapse and Cessation”Applied Economics, 42(23): 2921-2939.

+ Fixed-effect model

+ Sample selection model vs two-part models

+ Instrument variable

5. Frontier analysis

- The World Health Report 2000 (2000) Health Systems: Improving Performance World Health Organisation, World Health Organisation, Geneva.

- Hollingsworth, B. and Wildman, J. (2003) The efficiency of health production: re-estimating the WHO panel data using parametric and non-parametric approaches to provide additional information, Health Economics, 12: 493–504.

- Greene, W. (2004) Distinguishing between heterogeneity and inefficiency: stochastic frontier analysis of the World Health Organization’s panel data on national health care systems, Health Economics, 13: 959-980.

+ Data Envelopment Analysis

+ Stochastic Frontier Analysis

6. Consumer information and health

- Avery, Rosemary, Donald Kenkel, Dean Lillard, and Alan Mathios (2007). “Private Profits and Public Health: Does Advertising Smoking Cessation Products Encourage Smokers to Quit?” Journal of Political Economy 115 (3): 447-481.

- Ippolito, Pauline M. and Alan Mathios (1990) “Information, Advertising and Health Choices: A Study of the Cereal Market.” RAND Journal of Economics 21 (3):459-480.

- Mathios, A. (2000) ‘The Impact of Mandatory Disclosure Laws on Product Choices: An Analysis of the Salad Dressing Market,” Journal of Law and Economics, 43 (2), 651-677.

+ Heterogeneous Treatment Effect

7. Education and health

- Lleras-Muney, Adriana. (2005). “The Relationship Between Education and Adult Mortality in the United States.” Review of Economic Studies, 72(1): 189-221.

- Kenkel, Donald and Feng Liu. (2007)."The Evolution of the Schooling-Smoking Gradient" presented at the International Health Economics Association 6th World Congress, Copenhagen.

- Grossman, Michael (2006). “Education and Nonmarket Outcomes,” in Eric Hanushek and Finis Welch, editors, Handbook of the Economics of Education. Amsterdam: North-Holland, an imprint of Elsevier Science.

+ Survival analysis: discrete time hazard model vs Cox proportional model

8. Health insurance and health

- Manning, Willard G., Joseph Newhouse, N. Duan, Emmitt Keeler, and Arlene Liebowitz. (1987). “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review, 77(3): 251-277.

- Martin, Stephen, Nigel Rice, and Peter C. Smith. (2008). “Does health care spending improve health outcomes? Evidence from English programme budgeting data” Journal of Health Economics27, 826–842.

- Bitler, Marianne, Jonah Gelbach, Hilary Hoynes. (2004) “Welfare Reform and Health” NBER working paper.

+ Random experiment

+ Difference-in-difference

9. More on health insurance

- Chandra, Amitabh, Jonathan Gruber, and Robin McKnight. 2010. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly,"American Economic Review 100(1), 1-24.

- Simon, Kosali, "Adverse Selection in Health Insurance Markets? Evidence from State Small-Group Health Insurance Reforms,"Journal of Public Economics, 89, 2005, 1865-1877.

- Doyle, Joseph J. Jr. 2005. "Health insurance, Treatment and Outcomes: Using Auto Accidents as Health Shocks."Review of Economics and Statistics 87(2), 256-270.

- Cutler, David, Allison B. Rosen, and SandeepVijan, 2006. "Value of Medical Innovation in the United States: 1960-2000,"New England Journal of Medicine, 355(9), 920-927.

10. Public policy analysis

- Gruber, Jonathan and Janet Currie (1996) "Saving Babies: The Efficacy and Cost of Recent Expansions of Medicaid Eligibility for Pregnant Women," Journal of Political Economy, 104(6), December 1996, 1263-1296.

- Marianne Bitler, Janet M. Currie (2005) “Does WIC work? The effects of WIC on pregnancy and birth outcomes,” Journal of Policy Analysis and Management, v. 24, no. 1, Winter 2005, pp. 73-91.

- Cawley, John and Feng Liu. (2008) “Correlates of State Legislative Action to Address Childhood Obesity” ObesityVol 16, No 1, 162–167.

- Imbens, Guido W. and Thomas Lemieux, (2008). “Regression Discontinuity Designs: A Guide to Practice,” Journal of Econometrics, 142 (2), 615–635.

+ Quasi-experiment

+ Regression discontinuity