consumption and children abstract consumption by couples rises sharply in the beginning and falls later in life the causes of the early rise are hotly contested among the suggestions are rule of thumb behavior demographics liquidity constraints the precautionary motive and nonseparabilities between consumption and labor supply we develop two tests of the extreme hypothesis that only changes in family structure matter we estimate effects of the numbers and ages of children on consumption these estimates allow us to rationalize all of the increase in consumption without recourse to any of the causal mechanisms our estimates can be interpreted either as giving upper bounds on the effects of children or as evidence that the other causes are not important

comparative dynamics in a health investment model the method of comparative dynamics fully exploits the inter temporal structure of optimal control models i derive comparative dynamic results in a simplified demand for health model the effect of a change in the depreciation rate on the optimal paths for health capital and investment in health is studied by use of a phase diagram

physician induced demand for surgery following up the earlier findings by fuchs on surgeon induced demand this paper makes numerous data and econometric improvements in conducting a test of neoclassical and inducement theories a simultaneous equation model is used to estimate physician demand and equilibrium fees for surgery from a sample of 350 psus over the 1969 76 period the results provide definite support for the notion of competitive market failure particularly in large metropolitan areas other things equal fees and utilization are higher in surgeon rich areas although our estimated shift elasticities were only about one third those found by fuchs a statistically significant albeit small price elasticity of demand for surgery was also obtained in contrast to fuchs increasing monopoly and disequilibrium models are also tested without altering the basic findings where surgeons were in short supply their availability significantly affected surgery rates although a small supply effect was found in plentiful areas as well

theories of the price and quantity of physician services a synthesis and critique abstract in the traditional neoclassical model of supply and demand prices determine the allocation of economic resources the difficulty in applying this model to physician services is the rationing of resources directly by physicians themselves eliminating the allocative function of prices welfare consequences are appropriately judged in terms of efficiency and equity not departures from the structural relationships implied by supply and demand as interpreted here both competitive theories and target income theories of this market imply that physicians consider both their own welfare and the welfare of their patients in their decision making all consumer benefits and all producer costs are internalized by physicians they consequently have an incentive to obtain the maximum possible social benefit from the resources at their disposal to the extent that they are implicitly allowed to share in the resulting social gains the distributions of gains between patients and physicians is determined by professional ethics within bounds imposed by competitive forces

regulated prices rent seeking and consumer surplus price controls lead to misallocation of goods and encourage rent seeking the misallocation effect alone ensures that a price control always reduces consumer surplus in an otherwise competitive market with convex demand if supply is more elastic than demand or with log convex demand e g constant elasticity even if supply is inelastic the same results apply whether rationed goods are allocated by costless lottery or whether costly rent seeking and or partial decontrol mitigates the inefficiency our analysis exploits the observation that in any market consumer surplus equals the area between the demand curve and the industry marginal revenue curve

revealed preference analysis of non cooperative household consumption we develop a revealed preference approach to analyse non unitary household consumption behaviour that is not cooperative or pareto efficient we derive global necessary and sufficient conditions for data consistency with the model we show that the conditions can be verified by means of relatively straightforward mixed integer programming methods which is particularly attractive in view of empirical analysis our framework extends to tests for separate spheres and joint contribution to public goods an application to data drawn from the russia longitudinal monitoring survey demonstrates the empirical relevance of the non cooperative consumption model

optimal aging and death understanding the preston curve does prosperity lead to greater longevity if so what is the strength of the income channel to address these questions we develop a life cycle model in which households are subject to physiological aging in modeling aging we draw on recent research in the elds of biology and medicine the speed of the aging process and thus the time of death are endogenously determined by optimal health investments a calibrated version of the model accounts well for the observed non linear cross country link between longevity and income also known as the preston curve

semiparametric estimation and consumer demand this paper considers the implementation of semiparametric methods in the empirical analysis of consumer demand the application is to the estimation of the engel curve relationship and uses the british family expenditure survey household composition is modelled using an extended partially linear framework this is shown to provide a useful method for pooling non parametric engel curves across households of different demographic composition c 1998 john wiley sons ltd

revealed preference and its applications this note contains a short history of my work on the foundations of revealed preference emphasising the intellectual influence of sydney afriat i also present a few novel applications of revealed preference analysis drawn from some areas of applied economics

a new method of estimating risk aversion i show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model i derive a formula for the coefficient of relative risk aversion in terms of the ratio of the income elasticity of labor supply to wage elasticity and degree of complementarity between consumption and labor i bound the degree of complementarity using data on consumption choices when labor supply varies across states using labor supply elasticity estimates i find a mean estimate of 1 then show generating 2 requires that wage increases cause sharper labor supply reductions jel d81 j22

wage returns to ownership and fee responses to physician supply the labor and entrepreneurial components of reported physician net income are separated in an analysis of input and output market performance a wage equation corrected for selectivity bias is estimated for employee physicians and the results indicate that the performance of the labor market for primary care physicians is consistent with competitive theory the parameters are used to predict opportunity wage rates for self employed physicians differences between net income per hour and the predictions indicate that 16 percent of net income from practice is attributable to entrepreneurship evidence of negative selectivity into employee status is also found copyright 1990 by mit press

selfish bakers caring nurses a model of work motivation abstract work contributes to people s self image in important ways we propose a model in which effort is unobservable and where individuals have a preference for being important to others this gives the following predictions 1 if a worker s effort is paid by his marginal productivity bakers effort is just like in the standard model 2 if a worker s wage is unaffected by his effort nurses more effort is provided than in the standard model 3 to prevent that shirkers become nurses nurses wages must be kept strictly lower than bakers income at this wage level there will be too few nurses 4 overinvestment in nursing equipment can be justified as a means to attract motivated nurses 5 even with full income compensation both nurses and bakers may experience a net utility loss when losing their job 6 similarly both nurses and bakers may prefer work to welfare even with full income compensation

patients trust and the quality of physicians patients are uncertain of physicians quality but learn about the quality of particular physicians through experience in treatment patients come to trust physicians who have served them well this paper explores the economic consequences of patients learning and trust within a model of the market for physicians services in a market equilibrium there are too many incompetent physicians in practice surprisingly even the more competent physicians have an interest in preventing patients from judging quality except through experience as we show all physicians including the most competent may oppose steps to inform patients of physicians quality

medical interventions among pregnant women in fee for service and managed care insurance a propensity score analysis this paper extends earlier research on the effect of managed care on the receipt of four medical interventions for pregnant women ultrasound induction stimulation of birth electronic fetal monitor and caesarean delivery propensity score methods are used to account for sample selection issues regarding insurance choice managed care enrollees are more likely to receive an ultrasound which may be indicative of receiving better prenatal care managed care plans reduce the rate of caesarean deliveries but such limitations may be beneficial given the substantial medical evidence that caesarean deliveries are over utilized the results indicate that insurance coverage does influence treatment intensity but that utilization controls and provider financial incentives do not adversely affect care for pregnant women

negligible senescence an economic life cycle model for the future abstract we propose a model of aging and health deficit accumulation model with an infinite time horizon and a steady state of constant health the time of death is uncertain and endogenous to lifestyle and health behavior this setup can be conceptualized as a strive for immortality that is never reached we discuss adjustment dynamics and show that the new setup is particularly useful to understand aging of the oldest old i e of individuals for which morbidity and mortality have reached a plateau we then show how the existence of a steady state can be used to perform comparative dynamics exercises analytically as an illustration we investigate the effects of more expensive health investment and of advances in medical technology on optimal short run and long run health behavior

identification of supplier induced demand in the health care sector this paper explores the issues and pitfalls encountered when attempting to test empirically the hypothesis that physician hospital or any other input supply level induces increasing demand for health services in the strict sense of demand shift and through that increased demand for the input in question evidence is presented which suggests that an empirical test of the supplier induced demand sid hypothesis of the type traditionally performed may not in fact be feasible with cross sectional aggregate data such as is usually used

optimal taxation in life cycle economies abstract we use a very standard life cycle growth model in which individuals have a labor leisure choice in each period of their lives to prove that an optimizing government will almost always find it optimal to tax or subsidize interest income the intuition for our result is straightforward in a life cycle model the individual s optimal consumption work plan is almost never constant and an optimizing government almost always taxes consumption goods and labor earnings at different rates over an individual s lifetime one way to achieve this goal is to use capital and labor income taxes that vary with age if tax rates cannot be conditioned on age a nonzero tax on capital income is also optimal as it can imperfectly mimic age conditioned consumption and labor income tax rates journal of economic literature classification numbers e62 h21

opening the black box of intra household decision making theory and non parametric empirical tests of general collective consumption models we provide revealed preference tests of general collective consumption models that account for public consumption and externalities within the household we further propose a novel approach to model special cases of this model which imply alternative assumptions regarding the sharing rule our application uses the panel data from the russia longitudinal monitoring survey we find that the general model together with a large class of special cases cannot be rejected by contrast we do reject the standard unitary model since our tests are entirely nonparametric this provides strong evidence in favor of models focusing on intrahousehold decision making

a theory of physician behavior with supplier induced demand the health care crisis of the 1960 s and 1970 s fueled unprecedented efforts by the congress to control costs and at the same time improve access to care as a basis for policy the economics literature offers confusing direction consisting of alternative theories of demand 9 13 theories of market structure 12 5 11 10 and theories of physician behavior and supply response 4 1 at the most fundamental levels of controversy economists have not resolved the issues of demand creation satisficing behavior and targeted income in the modelling of the physician firm the notion that health care markets may be dominated by the health care provider s ability to create demand was introduced formally in newhouse 12 evans parish and sully 4 green 8 and fuchs 6 all offer further refinement of the supplier induced model however as yet no formal presentation of such a theory exists to a large extent an analytical framework that incorporates the physician s decision making processes is absent and remains implicit in the empirical results found in the literature this paper presents a theoretical framework for a supplier induced model of physician behavior whereby we may compare and contrast its implications with those of the standard neoclassical model 1 the acknowledged strength of the supplier induced theory is its ability to explain empirical evidence which stands at odds with more traditional approaches in particular a number of studies have reported a direct association between physician density and physicians fees 12 7 2 that is as the stock of physicians increases the price of medi

technology and health expenditures a demand approach applied to a process innovation there is controversy among economists as to whether the diffusion of new medical technologies has been a contributing factor to rising health expenditures the economic literature is critically reviewed and another approach is advocated this alternative approach rests on the distinction between product and process innovations it is argued that the relationship between process innovations and health expenditures can be illuminated by determining if the process innovation and the original procedure are utilized as substitutes the empirical results provide no indication that alternative technologies for diagnosing diseases conditions of the upper gastrointestinal tract have been utilized as substitutes by australian medical practitioners operating on a fee for service basis this study finds no evidence to indicate that the process innovation of fibre optic endoscopy has reduced health expenditures associated with diagnosis of diseases conditions of the upper gastrointestinal tract

the market for medical services and physicians an application of hedonic price theory without disputing the importance of the special characteristics found in the market for medical services it is argued in this paper that the standard economic model of maximizing behaviour rather than an idiosyncratic theoretical formulation unique to the medical profession is well suited to this market this conclusion is based on analysis in which the technique of equalizing differences is used to define a competitive equilibrium that provides the possibility of both price and non price competition the maximizing model developed provides an alternative theoretical explanation of the limit placed on supplier induced demand to that offered by the target income model of physician behaviour or that offered by the arguments based on medical ethics le marche des soins et des medecins une application de la theorie des prix hedoniques sans remettre en question l importance des caracteristiques particulieres du march6 des soins l auteur suggere que le modele traditionnel de comportement de maximisation est applicable a ce march6 et un substitut preferable aux formulations theoriques specifiquements dessinees pour la profession medicale l auteur derive cette conclusion d une analyse dans laquelle la technique des diff6rences egalisantes est utilisee pour definir un equilibre concurrentiel qui accommode la concurrence par les prix mais aussi par d autres moyens le modele de comportement de maximisation qui est developpe fournit une explication th6orique de rechange pour la limite placee sur la demande engendree par le producteur les autres explications ont ete fournies par des modeles de comportement du medecin tentant de se donner acces a un revenu cible ou encore par des explications fondees sur l ethique medicale the market for medical care is distinct from that for other commodities since medical services are often non transferable once purchased kessel 1958 pauly 1978 and consumers frequently find it difficult to evaluate medical services evans 1974 these characteristics of the medical market and the observation that physician density and both physician fees and services are positively associated have encouraged the assertion that physicians control demand sloan and feldman 1978 although research assistance by franca pastro and mary stafford is gratefully acknowledged financial assistance for this research was provided by the british columbia youth employment program the university of alberta s central research fund and the president s research grant from simon fraser university in addition i am grateful for the comments made by chris hall terry heaps david ryan seminar participants at the university of alberta and two anonymous referees canadian journal of economics revue canadienne d economique xviii no 2 may 1985 printed in canada imprime au canada 0008 4085 85 377 94 1 50 c canadian economics association this content downloaded from 157 55 39 144 on mon 25 jul 2016 03 48 21 utc all use subject to http about jstor org terms

the meaning of death some simulations of a model of healthy and unhealthy consumption simulations of a model of healthy and unhealthy consumption are used to investigate the impact of various terminal conditions on life span pathways of health related consumption and health a model in which life span and the death stock of health are fixed is compared to versions in which i the death stock of health is freely chosen ii life span is freely chosen iii both the death stock of health and life span are freely chosen the choice of terminal conditions has a striking impact on optimal plans results are discussed with reference to the existing demand for health literature and illustrate the application of iterative processes to determine optimal life span the role played by the marginal value of health capital in determining optimal plans and the importance of checking the second order conditions for the optimal choice of life span

a model of the demand for longevity and the value of life extension we specify a demand function for longevity or quantity of life along with corresponding demand functions for indicators of quality of life and a value of health and life extension function we show that the demand for health must be derived in conjunction with that for longevity and the related consumption plan and that all choices depend on initial individual endowments and terminal conditions our comparative dynamics predictions indicate that optimal health and longevity are increasing functions of endowed wealth rather than necessarily current income that improvements in opportunities to produce health can accentuate the differences between endowed health and attained longevity levels and that the value individuals ascribe to their health may be increasing over a good portion of their life cycle we use this model to analyze observed empirical variations in levels and trends of life expectancy and in exposure to health risks across different population groups

the revealed preference approach to collective consumption behaviour testing and sharing rule recovery we present a revealed preference methodology for empirically analysing collective consumption behaviour first we introduce an integer programming ip methodology for testing data consistency with collective consumption models that account for publicly as well as privately consumed goods this ip methodology can include information on assignable quantities for private goods next we show that the ip methodology allows for recovering the personalized lindahl prices for the public goods and the personalized quantities for the private goods in turn this implies recovery of the sharing rule i e personalized income share levels an empirical application demonstrates the practical usefulness of the

best nonparametric bounds on demand responses this paper uses revealed preference inequalities to provide the tightest possible best nonparametric bounds on predicted consumer responses to price changes using consumer level data over a finite set of relative price changes these responses are allowed to vary nonparametrically across the income distribution this is achieved by combining the theory of revealed preference with the semiparametric estimation of consumer expansion paths engel curves we label these expansion path based bounds on demand responses as e bounds deviations from revealed preference restrictions are measured by preference perturbations which are shown to usefully characterize taste change and to provide a stochastic environment within which violations of revealed preference inequalities can be assessed

a new test for supplier inducement and application to the canadian market for dental care abstract the hypothesis that dentists do not induce demand for their services is tested using reduced form estimates of the price elasticity of demand if demand is autonomous shifts in supply for whatever reason should generate equivalent estimates provided access costs change proportionately with shifts in supply if demand inducement is present demand can appear to be very elastic or very inelastic depending on what is causing the shift in supply each of three applications of this test conducted in the context of jointly estimated fee and quantity equations using annual canadian data for 1956 1989 rejects the no inducement hypothesis

supplier induced demand a disequilibrium test this paper tests the hypothesis of market disequilibrium and supplier induced demand in the market for physicians services using canadian data from the period prior to the introduction of national health insurance the results support the hypothesis of disequilibrium with rapid upward adjustment of fees in the face of excess demand and extremely slow downward adjustment of fees in response to excess supply they do not support the hypothesis that physicians induced demand in the face of an excess supply of services

optimal choice of health and retirement in a life cycle model abstract we examine within a life cycle model the simultaneous choice of health care and retirement together with consumption health tends to have an impact on retirement through morbidity determining earnings and the disutility of work and through longevity determining the need to accumulate retirement wealth conversely the age of retirement drives the demand for health care through the value of survival and the value of morbidity reductions we characterise the optimal relationship between health expenditure and retirement and apply our model to analyse the effects of moral hazard in the annuity market while moral hazard always induces excessive health investments and an excessive duration of working life it also triggers an excessive level of consumption if the impact of health on the disutility of work is sufficiently large we examine a transfer scheme and mandatory retirement as policies towards curtailing moral hazard numerical analysis illustrates the role of moral hazard in shaping the life cycle allocation

identification of physician induced demand whether market failure exists in the health care sector because physicians induce demand in their own self interest has not been clearly addressed because of identification problems a model is developed which includes the patient s financial burden as a limiting factor on demand inducement new data from a national survey are used to test the demand inducement hypothesis and identify physician initiated expenditures when individual health insurance and other factors are held constant additional corroboration of the physician induced demand hypothesis is found but the magnitude of the effect is very small and is statistically significant only for more discretionary expenditures

a further analysis of the physician inducement controversy this article extends several recent contributions that have compared the physician induced demand hypothesis to the theory of a monopoly where advertising is included as a decision variable by introducing a standard profit maximizing model with inducement it derives the conditions for the optimum level of inducement to show that the controversy over inducement is directly related to the elasticity of demand for the physician s services in particular inducement is likely to be prevalent only where the individual physician has a high degree of monopoly power as measured by its elasticity of demand it will disappear entirely as competitive conditions are approached furthermore the article argues that a physician s level of induced output is likely to diminish and not increase as others have suggested following increases in physician supply

non parametric tests of consumer behaviour the neoclassical model of consumer behaviour postulates that a consumer s choice behaviour can be described as deriving from utility maximization subject to a budget constraint one is then naturally led to ask what this model implies about observed behaviour this question has been addressed from two quite distinct approaches the first approach originating in the work of slutsky 1915 and antonelli 1886 derives necessary and sufficient conditions involving the derivatives of the demand functions the second approach originating in the work of samuelson 1938 1947 1948 derives algebraic conditions on the demand functions implied by maximizing behaviour

household consumption when the marriage is stable we develop a novel framework to analyze the structural implications of the marriage market for household consumption we de ne a revealed preference characterization of e cient household consumption when the marriage is stable stability means that the marriage matching is individually rational and has no blocking pairs we characterize stable marriage with intrahousehold consumption transfers but without assuming transferable utility we show that our revealed preference characterization generates testable conditions even with a single consumption observation per household and heterogeneous individual preferences across households the characterization also allows for identifying the intrahousehold decision structure including the sharing rule under the same minimalistic assumptions an application to dutch household data demonstrates the usefulness of our theoretical results we nd that the female gets a higher income share when her relative wage increases which we can give a structural interpretation in terms of outside options from marriage that vary with individual wages

the market for physicians services theoretical implications and an empirical test of the target income hypothesis over the period 1965 to 1977 expenditure for health care in the united states increased from 181 per capita to 697 per capita the share of gnp composed of health care expenditures grew from 5 9 in 1965 to 8 8 in 1977 over this same period the number of physicians in the u s increased from 153 physicians per 100 000 population to 194 physicians per 100 000 such startling figures have generated much interest in the economics of health care with special concern about physician behavior and its effects upon health care costs the frequent empirical finding of a positive partial correlation between physicians fees or earnings and the number of physicians per capita have led many observers to eschew standard supply and demand models in favor of models that allow physicians themselves to significantly affect the demand for their services an assumption that physicians influence demand can not by itself differentiate a model from standard microeconomic models a profit maximizing doctor possessing costless demand shifting powers would shift demand to the greatest possible extent and then choose price and quantity to maximize profits subject to that shifted demand function a demand shifting model can yield results which are qualitatively different from those predicted by a standard model only with a behavioral assumption other than profit maximization the assumption of satisficing behavior on the part of physicians is a common substitute numerous empirical findings have been cited as evidence of the validity of the satisficing with demand shifting models much of this evidence however has been obtained as a by product of estimates of the demand for physician services rather than as the result of the estimation of a supply induced demand with satisficing model this lack

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

who is more rational we report on the results of a large scale field experiment that enables us to test for consistency with utility maximizing behavior and to investigate the correlation between individual behavior and demographic and economic characteristics we conducted the experiment with the centerpanel a representative sample of over 2 000 dutch households using procedures similar to those used by choi et al 2007b in a setting with risk we find a high level of consistency in the individual level decisions there is also considerable heterogeneity in subjects consistency scores high income and high education subjects display greater levels of consistency men are more consistent than women and young subjects are more consistent than those who

a clarification of theories and evidence on supplier induced demand for physicians services this article both simplifies and extends the literature on physician induced demand it shows that inducement should be expected in all imperfectly competitive markets that are also characterized by incomplete agency relationships more important it argues that confusion over the extent of the inducement phenomenon has been created by several contributions that fail to distinguish between the effects of changes in physician population ratios on changes in the individual physician s output and the effects on per capita utilization in particular it demonstrates that by confounding units of analysis the major empirical results found in recent articles by rossiter and wilensky are contradicted by their model their evidence however together with findings from other studies are reinterpreted to suggest that physicians are even more constrained than is generally believed in being able to induce increases in demand

a nonparametric revealed preference approach to measuring the value of environmental quality we develop an approach to valuing non market goods using nonparametric revealed preference analysis we show how nonparametric methods can also be used to bound the welfare effects of changes in the provision of a non market good our main context is one in which the non market good affects the marginal utility of consuming a related market good this can also be framed as a shift in the taste for or quality of the market good a systematic approach for incorporating quality taste variation into a revealed preference framework for heterogeneous consumers is developed this enables the recovery of the minimal variation in quality required to rationalise observed choices of related market goods the variation in quality appears as a adjustment to the price for related market goods which then allows a revealed preference approach to bounding compensation measures of welfare effects to be applied

the rate of return on everything 1870 2015 what is the aggregate real rate of return in the economy is it higher than the growth rate of the economy and if so by how much is there a tendency for returns to fall in the long run which particular assets have the highest long run returns we answer these questions on the basis of a new and comprehensive data set for all major asset classes including housing the annual data on total returns for equity housing bonds and bills cover 16 advanced economies from 1870 to 2015 and our new evidence reveals many new findings and puzzles

how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice

the effect of time price on the demand for medical care services this paper analyzes the effect of time price on medical care demand and describes use of a reservation wage question from a household survey to develop a measure of time price for obtaining medical care a comprehensive three equation model of the demand for female medical care services examines choice of provider entry demand and the demand for physician visits results show that provider choice is based primarily on economic factors and that an expected high time price discourages women from choosing a public provider and from seeking gynecological maternal health or family planning services during the year yet does not influence the number of visits made once care is used the estimated model shows that medical care demand equations should control for the type of provider chosen and the opportunity cost of time for alternative activities when testing for a negative time price effect of obtaining medical care

the gender gap in mortality how much is explained by behavior abstract in developed countries women are expected to live about 4 5 years longer than men in this paper we develop a novel approach to gauge the extent to which gender differences in longevity can be attributed to gender specific preferences and health behavior we set up a physiologically founded model of health deficit accumulation and calibrate it using recent insights from gerontology from fitting life cycle health expenditure and life expectancy we obtain estimates of the gender specific preference parameters we then perform the counterfactual experiment of endowing women with the preferences of men in our benchmark scenario this reduces the gender gap in life expectancy from 4 6 to 1 4 years when we add gender specific preferences for unhealthy consumption the model can motivate up to 89 percent of the gender gap our theory offers also an economic explanation for why the gender gap declines with rising income

nonparametric engel curves and revealed preference this paper applies revealed preference theory to the nonparametric statistical analysis of consumer demand knowledge of expansion paths is shown to improve the power of nonparametric tests of revealed preference the tightest bounds on indifference surfaces and welfare measures are derived using an algorithm for which revealed preference conditions are shown to guarantee convergence nonparametric engel curves are used to estimate expansion paths and provide a stochastic structure within which to examine the consistency of household level data and revealed preference theory an application is made to a long time series of repeated cross sections from the family expenditure survey for britain the consistency of these data with revealed preference theory is examined for periods of consistency with revealed preference tight bounds are placed on true cost of living indices

sharing rule identification for general collective consumption models we propose a method to identify bounds i e set identi cation on the shar ing rule for a general collective household consumption model unlike the eects of distribution factors it is well known that the level of the sharing rule cannot be uniquely identi ed without strong assumptions on preferences across households of dierent compositions our new results show that though not point identi ed without these assumptions narrow bounds on the sharing rule can be obtained we get these bounds by applying revealed preference restrictions implied by the collective model to the household s continuous aggregate demand functions we obtain informative bounds even if nothing is known about whether each good is public private or assignable within the household though having such infor mation tightens the bounds we apply our method to us 1999 2009 psid data this application obtains tight sharing rule bounds that yield useful conclusions regarding the eects of income and wages on intrahousehold resource sharing and on the prevalence of individual as opposed to household level poverty

profit or patients health benefit exploring the heterogeneity in physician altruism abstract this paper investigates physician altruism toward patients health benefit using behavioral data from hennig schmidt et al s 2011 laboratory experiment in the experiment medical students in the role of physicians decide on the provision of medical services the experimental setup allows us to identify the influence of profits and patients health benefit on the choice of medical treatment we estimate physician altruism the weight individuals attach to patients health benefit by fitting mixed logit and multinomial logit regression models to the experimental data estimation results provide evidence for physician altruism we find however substantial variation in the degree of physician altruism we also discuss some implications of our results for the design of physician payment schemes in the light of the theoretical literature

comparative dynamic analysis of the full grossman model the paper applies the method of comparative dynamic analysis to the full grossman model for a particular class of solutions it derives the equations implicitly defining the complete trajectories of the endogenous variables relying on the concept of frisch decision functions the impact of any parametric change on an endogenous variable can be decomposed into a direct and an indirect effect the focus of the paper is on marginal changes in the rate of health capital depreciation it also analyses the impact of either initial financial wealth or the initial stock of health capital while the direction of most effects remains ambiguous in the full model the assumption of a zero consumption benefit of health is sufficient to obtain a definite for any direct or indirect effect

the collective model of household consumption a nonparametric characterization we provide a nonparametric characterization of a general collective model for household consumption which includes externalities and public consumption next we establish testable necessary and sufficient conditions for data consistency with collective rationality that only include observed price and quantity information these conditions have a similar structure as the generalized axiom of revealed preference for the unitary model which is convenient from a testing point of view in addition we derive the minimum number of goods and observations that enable the rejection of collectively rational household behavior

a model of physician behaviour with demand inducement we present a model of the physician patient relationship extending on the model by farley farley p j 1986 theories of the price and quantity of physician services journal of health economics 5 315 333 of supplier induced demand sid first we make a case for the way this model specifies professional ethics physician competition and sid itself second we derive predictions from this model and confront them with the neoclassical model finally we stress the importance of considering how sid affects patient welfare in providing an example where physicians ability to induce makes patients better off to evaluate patient welfare we derive approximations of the patients welfare loss due to physician market power in both the neoclassical model and the inducement model

forward shifting of the personal income tax by self employed canadian dentists in this paper two tests are conducted of the null hypothesis that self employed canadian dentists do not shift the burden of their personal income tax forward to their patients by charging higher real dental fees the first test using ordinary least squares estimation of a reduced form dental fee equation is based on an exogenous tax variable the second test uses two stage least squares estimation of a reduced form dental fee equation with an endogenous tax variable both tests reject the null hypothesis of no forward shifting and fail to reject the hypothesis that self employed canadian dentists shift forward 100 percent of their personal income tax burden

tax reform and welfare measurement do we need demand system estimation the exact measurement of the welfare costs of tax and price reform requires a detailed knowledge of individual preferences typically first order approximations of welfare costs are calculated avoiding detailed knowledge of substitution effects the authors derive second order approximations which unlike first order approximations require knowledge of the distribution of substitution elasticities this paper asks to what extent simple approximations can be used to measure the welfare costs of tax reform and evaluates the magnitude of the biases for a plausible size tax reform in the authors empirical examples first order approximations display systematic biases second order approximations always work well

efficient intra household allocations a general characterization and empirical tests the neoclassical theory of demand applies to individuals yet in empirical work it is usually taken as valid for households with many members this paper explores what the theory of individuals implies for households that have more than one member we make minimal assumptions about how the individual members of the household resolve conflicts all we assume is that however decisions are made outcomes are efficient we refer to this as the collective setting we show that in the collective setting household demands must satisfy a symmetry and rank condition on the slutsky matrix we also present some further results on the effects on demands of variables that do not modify preferences but that do affect how decisions are made we apply our theory to a series of surveys of household expenditures from canada the tests of the usual symmetry conditions are rejected for two person households but not for one person households we also show that income pooling is rejected for two person households we then test for our collective setting conditions on the couples data none of the collective setting restrictions are rejected we conclude that the collective setting is a plausible and tractable next step to take in the analysis of household behavior

elasticity estimates from a dynamic model of interrelated demands for private and public acute health care this paper investigates the private public mix in acute health care provision in the uk it uses an interrelated shares model derived from a translog function combined with dynamic adjustment using prices for public care constructed from nhs waiting lists the insurance cost of private care and the retain price index impact intermediate and long run elasticities of demand for private and public care are obtained the role of hospital consultants and of an aging population are also considered

improving revealed preference bounds on demand responses there are three key dimensions by which revealed preference bounds on consumer demand responses can be improved the first relates to the improvements that arise from using expansion paths for given relative prices e bounds the second concerns the addition of new price information thirdly there are improvements due to assuming separability our previous research has examined the first two cases in this article we show how to impose separability assumptions within a fully nonparametric analysis and distinguish between weak and homothetic separability we also apply these ideas to the analysis of demand responses using united kingdom household level data

consumer gains from physician immigration to the us 1966 1971 this paper examines the impact of the 1965 liberalization of immigration restrictions on the market for physician services in the united state estimates of the effect of physician migration on consumer surplus and physician earnings are calculated for the period beginning in 1966 and ending in 1971 a conservative estimate is that the dollar value of the benefits to consumers from unrestricted migration over the six year period had reached 2 9 billion dollars in 1967 dollars by 1971 measured as a percentage of total expenditures on physician services the gain to consumers ranges from near 1 in 1966 to over 12 by 1971 a conservative estimate is that physician earnings would have been 11 higher by 1971 had there been no change in migration restirctions in 1965 as an empirical contribution to the debate over physician migration the estimates presented in this paper give a rough idea of the magnitude of the dollar values involved when migration restrictions are liberalized during a period of rapid

afriat s theorem and some extensions to choice under uncertainty the first part of the paper reviews the methodology developed by sydney afriat for determining whether a finite set of price and quantity data are consistent with utility maximizing behavior by a consumer some extensions of his basic model to models of consumer behavior where the structure of preferences is restricted in some way are also explained examples of special structures are homotheticity separability and quasilinearity of the utility function the second half of the paper is devoted to developing afriat type consistency tests for expected and nonexpected utility maximizing behavior

the value of life and the rise in health spending over the past half century americans spent a rising share of total economic resources on health and enjoyed substantially longer lives as a result debate on health policy often focuses on limiting the growth of health spending we investigate an issue central to this debate is the growth of health spending a rational response to changing economic conditions notably the growth of income per person we develop a model based on standard economic assumptions and argue that this is indeed the case standard preferences of the kind used widely in economics to study consumption asset pricing and labor supply imply that health spending is a superior good with an income elasticity well above one as people get richer and consumption rises the marginal utility of consumption falls rapidly spending on health to extend life allows individuals to purchase additional periods of utility the marginal utility of life extension does not decline as a result the optimal composition of total spending shifts toward health and the health share grows along with income in projections based on the quantitative analysis of our model the optimal health share of spending seems likely to exceed 30 percent by the middle of the century

marital matching economies of scale and intrahousehold allocations we propose a novel nonparametric method to empirically identify economies of scale in multiperson household consumption we assume consumption technologies that define the public and private nature

testing for optimal monetary policy via moment inequalities the specification of an optimizing model of the monetary transmission mechanism requires selecting a policy regime commonly commitment or discretion in this paper we propose a new procedure for testing optimal monetary policy relying on moment inequalities that nest commitment and discretion as two special cases the approach is based on the derivation of bounds for in ation that are consistent with optimal policy under either policy regime we derive testable implications that allow for specification tests and discrimination between the two alternative regimes the proposed procedure is implemented to examine the conduct of monetary policy in the united states economy

presidential address how revealing is revealed preference this lecture address the following two key criticisms of the empirical application of revealed preference theory when the rp conditions do not reject they do not provide precise predictions and when they do reject they do not help characterize the nature of irrationality or the degree direction of changing tastes recent developments in the application of rp theory are shown to have rendered these criticisms unfounded a powerful test of rationality is available that also provides a natural characterization of changing tastes tight bounds on demand responses and on the welfare costs of relative price and tax changes are also available and are shown to work well in practice jel

individual welfare analysis for collective households abstract we propose novel tools for the analysis of individual welfare on the basis of aggregate household demand behavior the method assumes a collective model of household consumption with the public and private nature of goods specified by the empirical analyst a main distinguishing feature of our approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric we show how to identify individual money metric welfare indices from observed household demand along with the intrahousehold sharing rule and the individuals willingness to pay for public consumption i e lindahl prices the method is easy to use in practice and yields informative empirical results which we demonstrate through both a simulation exercise and an empirical application to labor supply data drawn from the panel study of income dynamics

the normative economics of health care finance and provision whereas in many countries the crisis in medical care has been seen in terms of excess spending on health services in the uk it has been seen at least by most of those who manage and work in the nhs as a crisis of underfunding this has come about as the result of the government s successful attempts to restrain the rate of growth of real spending on the nhs which in turn reflects the government s belief that its principal effective weapon against what it perceives to be inefficiency in the nhs is to challenge management itself reformed and to some extent liberated by systematic financial squeezes the same concern has given rise to a host of proposals for reform of the nhs most of which involve a much greater role for private insurance private finance of other kinds such as out of pocket payments and private provision of health care itself

physician response to fee changes with multiple payers this paper develops a general model of physician behavior with demand inducement encompassing the two benchmark cases of profit maximization and target income behavior it is shown that when income effects are absent physicians maximize profits and when income effects are very strong physicians seek a target income the model is used to derive own and cross price expressions for the response of physicians to fee changes in the realistic context of more than one payer under the alternative behavior assumptions of profit maximization and target income behavior the implications for public and private fee policy and empirical research on physician response to fees are discussed

technological diffusion in primary health care the paper contains a theoretical and empirical analysis of the driving forces behind the diffusion of dry chemical laboratory equipment in norwegian primary health care the empirical analysis is embedded in a theoretical model of a dynamic investment problem focusing on heterogeneity in the potential adopters profit functions the empirical analysis indicates that most adopters are too late in adopting the new technology a logit analysis of the diffusion process lends some support to the notion that profit function heterogeneity influences the diffusion process an offspin of the empirical analysis is information on the reimbursement system indicating that this system does not promote efficient resource allocation in the sector

what do we learn about consumer demand patterns from micro data the aim of this paper is to assess the importance of using micro level data in the econometric analysis of consumer demand to do this we utilize a time series of repeated cross sections covering some 4 000 households in each of 15 years employing a number of different aggregation procedures we conclude that aggregate data alone are unlikely to produce reliable estimates of structural price and income coefficients however once certain aggregation factors as well as trend and seasonal components are included an aggregate model is not necessarily outperformed across all demand equations in terms of forecasting ability jel d12 c52 c31 the purpose of this paper is to develop a complete consumer demand system based on a time series of individual household data and to use it to measure the biases introduced into the study of consumer de mand behavior when aggregate data are used in place of the appropriate microeco nomic data we assess the suitability of ag gregate data through the impact on income and price elasticities and by evaluating the ability of both micro and aggregate based models to forecast aggregate consumer de mand the biases introduced by the use of aggregate data depend upon the way that household characteristics interact with in come and price effects and on departures of demand systems from linearity we explore the structure of microeconomic demand sys tems and the role of household characteris tics in the behavior of consumer demand both for the light this may shed on the pattern of future demands and for the im plications this behavior has for issues of aggregation consumer demand patterns typically found in micro data sets vary considerably across households with different household characteristics and with different levels of income we model this variability by making intercept and slope parameters in the budget share equations of our demand sys tem depend on household characteristics and by allowing for nonlinear total log expenditure terms in fact in theory consistent demand systems it is total ex penditure rather than disposable income that is allocated across goods we find that this general framework leads to a well specified data coherent demand system which is a quadratic extension of the popu lar almost ideal model of angus s deaton and john muellbauer 1980 the micro level estimates are shown to be sensitive to the treatment of endogeneity of total expen diture and to the specification of interaction terms with household characteristics in ad dition this specification is also shown to possess many attractive features for the evaluation of aggregate models

uncertain lifetime and intertemporal choice risk aversion as a rationale for time discounting this article makes explicit the links between preferences over lotteries on length of life and intertemporal choice it shows that the approach used by traditional life cycle models to account for uncertain survival corresponds to a strong assumption of risk neutrality with respect to length of life relaxing such an assumption leads us to develop a more general formulation of lifetime utility in which time discounting is directly related to preferences over length of life exponential and hyperbolic discounting are found to result in a first approximation from constant and hyperbolic risk aversion with respect to length of life

quadratic engel curves and consumer demand this paper presents a model of consumer demand that is consistent with the observed expenditure patterns of individual consumers in a long time series of expenditure surveys and is also able to provide a detailed welfare analysis of shifts in relative prices a nonparametric analysis of consumer expenditure patterns suggests that engel curves require quadratic terms in the logarithm of expenditure while popular models of demand such as the translog or the almost ideal demand systems do allow flexible price responses within a theoretically coherent structure they have expenditure share engel curves that are linear in the logarithm of total expenditure we derive the complete class of integrable quadratic logarithmic expenditure share systems a specification from this class is estimated on a large pooled data set of u k households models that fail to account for engel curvature are found ro generate important distortions in the patterns of welfare losses associated with a tax increase

quality incentives for gps in a regulated market abstract this paper analyses whether gps in a capitation system have incentives to provide quality even though health is a credence good a model is developed where the quality of the service varies due to inherent differences between the gps and rational patients make choices based on the outcome of treamtent we find that it is difficult to provide appropriate incentives since the search activity of patients offsets direct effects of a change in reimbursement variation in the inherent ability of the gps is good since it increases the search activity of the patients and the optimal reimbursement scheme is inversely proportional to the dispersion in types finally we find that offering a menu of contracts can potentially increase social welfare above the level of a simple capitation regime but it tends to lead to a higher variation in quality levels