Questions and Answers of Health Economics

The version of the SIR model discussed in Section 21. 2 is flawed because it does not account for the possibility of prevalence elasticity.In Section 21.2 The SIR model of infectious diseaseIndicate
In this exercise, you will derive how a change in the price of vaccines changes the steady-state infected population, I∗, in an SIR model – discussed in Section 21. 2 – in which the demand for
In Section 8.4 we studied the case of a government-mandated ban on the sale of low quality cars. Review the basic assumptions of the Akerlof model, assume that car quality Xi is distributed uniformly
Suppose a local car dealership is offering an inspection service that can perfectly determine the quality of any car on the market. The dealership is trying to determine how much it will be able to
What happens when we reverse the information assumptions in the Akerlof model?Let us assume that buyers have perfect information about car quality, and that sellers have no information about the
Explain why the following statement is true, or provide a counter-example: A receiver operator characteristic curve, which plots the Type I error of a test against the Type II error from that same
Jachuck et al. (1982) report on an analysis of a certain drug designed to reduce hypertension (high blood pressure). Such hypotensive drugs are frequently effective but are also linked to
Consider Figure 18.7, which depicts the labor market disincentive effects of Medicaid. In the figure:• L is the number of hours worked per year.• ¯I is the income threshold for Medicaid
A company developing an artificial retina to help the blind see is trying to determine the quality of life for blind people.• The company first surveys a group of sighted people using a time
Indicate whether each statement is true or false, and justify your answer.Population growth in the developed world is contributing to population aging.
Indicate whether each statement is true or false, and justify your answer.Japan’s population is not aging along with the rest of the developed world.
Indicate whether each statement is true or false, and justify your answer.In a world of population decline, many national health systems are no longer solvent because they were predicated on the
Indicate whether each statement is true or false, and justify your answer.In recent years, each year’s Medicare tax receipts have been sufficient to cover that year’s services.
Indicate whether each statement is true or false, and justify your answer.In the 1970s, researchers were worried that, while Americans were living longer than previous generations, they were actually
Indicate whether each statement is true or false, and justify your answer.Reducing mortality from one disease necessarily increases the sum of the total mortality risk from all other causes of death.
Indicate whether each statement is true or false, and justify your answer.If a costless drug were created that effectively cured a prevalent and deadly disease, health care expenditures would
Indicate whether each statement is true or false, and justify your answer.Disproportionate spending on end-of-life care is never clinically justifiable.
Indicate whether each statement is true or false, and justify your answer.Advance directives allow patients to indicate their own preferences about EOL care, but they cannot be acted upon if a dying
Indicate whether each statement is true or false, and justify your answer.Aggressive natalist policies have successfully reversed birth rate declines in most European countries.
It is the year 2020 and you have just been elected President of Pcoria, a small island nation. Congratulations! Your country has a health care system like the one in the US, except much smaller. The
A simple future elderly model. In this exercise, you will create a very simple version of the FEM designed at RAND. Our model will follow a cohort of 65-year-olds as they age, and each period of the
Review the previous exercise before embarking on this one.Data in previous exercise A simple future elderly model. In this exercise, you will create a very simple version of the FEM designed at
While it may seem intuitively obvious that health expenditures will increase as a population ages – older people after all are less healthy on average than younger people –in fact, several
The Coase theorem implies that there are no externalities.Indicate whether each statement is true or false, and justify your answer.
Suppose Fred imposes negative externalities on Wilma when he engages in some otherwise productive activity (like yelling “Yabba Dabba Doo!” to encourage himself, for instance). Suppose further
In the presence of externalities, private and social welfare diverge.Indicate whether each statement is true or false, and justify your answer.
Herd immunity is a negative health externality.Indicate whether each statement is true or false, and justify your answer.
Every antibiotic taken causes a net social loss by contributing to antibiotic resistance.Indicate whether each statement is true or false, and justify your answer.
Pigouvian taxes always improve social welfare.Indicate whether each statement is true or false, and justify your answer.
The Coase theorem says that well-defined property rights and low transaction costs are needed in order for the social optimum to be guaranteed through bargaining.Indicate whether each statement is
Viable organs, while scarce, are readily accessible to extremely wealthy patients for a high price.Indicate whether each statement is true or false, and justify your answer.
A Coasian approach may not succeed in achieving a socially optimal level of organ transactions.Indicate whether each statement is true or false, and justify your answer.
Most countries effectively impose an infinite tax on organ sales.Indicate whether each statement is true or false, and justify your answer.
Subsidies that provide financial incentive for people to become organ donors may lead to a decrease in donations.Indicate whether each statement is true or false, and justify your answer.
Consider two vaccines for different viruses χ and Ω. Assume that the marginal cost of producing both drugs is constant and that the fixed cost is small. In other words, assume that the supply curve
Assume that the daily demand for packs of cigarettes in the tobacco-addicted nation of Pcoria is Q = 100 − P Further assume that the marginal cost of producing a pack of cigarettes is §6, and that
Review the assumptions from the previous problem, and assume that it still costs § 6 to produce a pack of cigarettes.a. Draw the private supply curve and the private demand curve in this market.
Consider a patient (let’s call her A) with end-stage renal disease, who has been on the waiting list for a kidney for several years. She has no family members with kidneys that are immunological
Below is the abstract of a recent NBER working paper entitled “Organ allocation policy and the decision to donate” by Judd Kessler and Alvin Roth (NBER Working Paper No. 17324, 2011):Organ
The ratio of a disease’s prevalence to its incidence is constant.Indicate whether each statement is true or false, and justify your answer.
The expense of opening a secret offshore bank account is an example of the excess burden of US income taxes.Indicate whether each statement is true or false, and justify your answer.
A disease that has been eradicated necessarily imposes no welfare loss in the present. (Be sure to include at least one example disease to illustrate your explanation.)Indicate whether each statement
A disease that is very uncommon necessarily imposes very little welfare loss.Indicate whether each statement is true or false, and justify your answer.
If a disease is shown to have a surprisingly high prevalence elasticity of demand for self-protection, policymakers should conclude that an eradication campaign is going to be more difficult than
Public health models that do not take economic epidemiological principles into account often make them is taken assumption that the prevalence elasticity of demand is essentially infinite.Indicate
In the SIR model of infectious disease, a high value of β for a disease indicates that people are very fearful of catching it and protect themselves more.Indicate whether each statement is true or
The 1989– 91 measles epidemic induced parents in states with a high measles prevalence rate to inoculate their children at earlier ages.Indicate whether each statement is true or false, and justify
For a given disease (with all else equal), if a vaccine has a higher prevalence elasticity of demand, a vaccine subsidy will be a more effective tool to control the equilibrium number of people
In the steady-state SIR model, the number of susceptible people is not affected by changes in vaccine price.Indicate whether each statement is true or false, and justify your answer.
Most economists believe that the smallpox eradication campaign was not costeffective because it required so many upfront costs and smallpox was already eliminated in much of the developed
The SIR-style diagram in Figure 21.8 demonstrates the dynamics of a new disease called fictitia that is sweeping the nation. Fictitia is different from the disease we diagrammed in Section 21. 2 in a
The phenomenon of herd immunity makes disease eradication difficult because it ensures that diseases will survive until vaccination rates reach 100%.Indicate whether each statement is true or false,
A terrible disease called fictitia is ravaging the woebegone nation of Pcoria. Fortunately, government scientists have just discovered the formula for an effective vaccine. Given current raw material
Suppose that some members of a population are infected with a sexually transmitted virus that causes disease X, and some are infected with another sexually transmitted virus that causes disease Y.
The SARS virus is a particularly virulent form of the flu virus that spread through Taiwan and many parts of China in the mid-2000s. In a recent National Bureau of Economic Research working paper
Consider an infectious disease such as the flu which is spread primarily through virus particles in aerosolized respiratory droplets of already infected people.a. In the midst of an infectious
In the US, the rise in body weight started about 30 years ago.Indicate whether each statement is true or false, and justify your answer.
While obesity generally results in higher per-year medical costs, obese individuals do not typically have higher average lifetime medical costs than non-obese individuals because they do not live as
Increasing female labor force participation rates (alongside declining time spent on preparing meals at home) have been implicated as one cause of rising obesity rates.Indicate whether each statement
At firms that do not provide health insurance, the wages of obese workers are lower than the wages of non-obese workers with similar levels of productivity.Indicate whether each statement is true or
Over the past 15 years, obesity rates have increased sharply for high-school dropouts and for people with only high-school degrees. Rates for college graduates, however,have remained flat.Indicate
Developed countries with high food price tariffs tend to have lower prevalence rates of obesity.Indicate whether each statement is true or false, and justify your answer.
Suppose that there is no wage penalty for obesity at the Springfield Nuclear Power Plant (SNPP). Suppose further that Mr Burns (the boss) offers his employees generous pooled health insurance
People tend to underestimate the calories counts of food not prepared for them at home.Indicate whether each statement is true or false, and justify your answer.
Body mass index (BMI) is a reliable measure of obesity.Indicate whether each statement is true or false, and justify your answer.
The only way to combat childhood obesity is through strict government intervention.Indicate whether each statement is true or false, and justify your answer.
Genetics plays a role in determining body weight for children and adults.Indicate whether each statement is true or false, and justify your answer.
New York has seen a majority of people change their behaviors because of the recent requirement that restaurants list the calorie counts for all their menu items.Indicate whether each statement is
Many countries in the world have experienced increases in the number of obese individuals in their population, but only the US has seen increases in childhood obesity.Indicate whether each statement
Having generous insurance makes you fat because you do not pay the full health costs of eating poorly and not exercising.Indicate whether each statement is true or false, and justify your answer.
Having an obese friend increases the likelihood of obesity.Indicate whether each statement is true or false, and justify your answer.
Suppose Homer and Smithers are in the same health insurance pool and they pay the same premium for their health insurance. Suppose further, that the SNPP discriminates against employees on the basis
Suppose that in the midst of a financial crisis, Mr Burns is forced to sell the SNPP to wealthy chocolate tycoons. The first thing the tycoons do is reverse Mr. Burns’ discriminatory policy against
Risk-averse individuals have a concave value function for prospective gains and a convex value function for prospective losses.Indicate whether each statement is true or false, and justify your
The latest craze sweeping Pcoria is a new kind of exotic chocolate imported from the faraway alpine nation of Chplandia. Chplandian chocolate is delicious and cheap: each bar produces $2 worth of
Pcorians are eating more Chplandian chocolate than ever, and politicians in the Pcorian parliament are starting to propose interventions to reduce chocolate consumption. Assume again that Pcorian
It is October 31 (Halloween night), and thanks to a great pirate costume, you have pulled in a record haul during trick-or-treating – 1001 pieces of candy! Before bed, you have to decide how you
Review the setup of Exercise 12. Assume you have time-inconsistent preferences (β = 0.5, δ = 0.5) but are also a sophisticate.a. Propose two realistic commitment mechanisms in this situation. One
Below is the key empirical finding from a recent NBER working paper titled “Do consumers exploit precommitment opportunities? Evidence from natural experiments involving liquor consumption” by
In this question, we discuss the research on obesity contagion by Christakis and Fowler (2007) introduced in Section 22.5. They find that people who identify obese people as friends are also more
Individuals who always make decisions consistent with completeness, transitivity, and independence are exhibiting bounded rationality.Indicate whether each statement is true or false, and justify
Loss aversion is the economics of jealousy: people value what they do not have more than what they do have.Indicate whether each statement is true or false, and justify your answer.
During prospect theory’s editing stage, the operation of segregation always occurs before the operation of simplification.Indicate whether each statement is true or false, and justify your answer.
Expected utility theory offers one possible valuation function that satisfies the properties of completeness, transitivity, and independence of preferences under uncertainty.Indicate whether each
The certainty effect and sub certainty are opposite phenomena.Indicate whether each statement is true or false, and justify your answer.
A typical value function is concave due to risk aversion.Indicate whether each statement is true or false, and justify your answer.
Whether a prospect is coded as a gain or as a loss can depend on how that prospect is framed.Indicate whether each statement is true or false, and justify your answer.
The endowment effect leads to a stronger status quo bias, because trades are more likely to occur.Indicate whether each statement is true or false, and justify your answer.
All perceived probabilities are weighted lower than actual probabilities.Indicate whether each statement is true or false, and justify your answer.
Consider Figure 23.7, which depicts a scenario in the Rothschild–Stiglitz model of adverse selection.a. Explain why α is not a valid pooling equilibrium.b. Explain why your answer to the
Suppose a new and terrifying disease called bhtitis has been created in amad scientist’s laboratory. In a recently released study, medical researchers determined that the average Pcorian adult has
Consider the following macabre example conceived originally by Richard Zeckhauser.You are forced to play a “game” of Russian roulette, but before the game is played, you are allowed to pay to
Every year in early January, millions of people resolve to exercise more than they had in the previous year. Inevitably, a substantial portion of people making such a resolution fail to carry through
At Duke University, tickets for the men’s basketball team are highly coveted. The student fans known as the “Cameron Crazies” often camp outside the basketball arena for days leading up to the
There is a massive body of evidence that humans prefer a fixed amount of utility now to that same amount of utility later.Indicate whether each statement is true or false, and justify your answer.
If a person discounts utility from future periods, her preferences are time-inconsistent because she does not value utility in all periods equally.Indicate whether each statement is true or false,
Suppose an individual prefers to drink beer during college but enjoys wine more during middle age. This is a classic example of time-inconsistent preferences.Indicate whether each statement is true
Evidence indicates that exponential discounting functions are very rare in humans.Indicate whether each 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.Indicate whether each
Contrary to the predictions of welfare economics, people are willing to pay to have constraints place on themselves.Indicate whether each statement is true or false, and justify your answer.

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