on the efficiency of law a public choice perspective economists have not yet developed a comprehensive theoretical framework incorporating transaction cost economics within a public choice perspective for predicting when there will be an efficiency problem with the law transaction cost reasoning and the rent seeking insight have not been applied systematically in a dynamic institutional context to evaluate when the law will be used to increase or not minimize problems of bounded rationality and opportunism this paper takes a first step at identifying and remedying this deficiency the paper first provides a critical review of relevant theoretical contributions made by becker 1983 1985 posner 1977 priest 1977 rubin 1977 1982 williamson 1975 1985 and others we then show how analysis of the efficiency of law can be synthesized into a broader whole by incorporating transaction cost economics more fully into existing understanding of rentseeking in the political realm thus within the public choice paradigm this paper develops a deeper transaction cost analysis of the efficiency of law building on prior research by the authors crew and rowley 1988a 1988b twight 1983 1988 the paper identifies variables that position legal rules on a spectrum that ranges from those that are predominantly transaction cost

the effect of the medicaid home care benefit onlong term care choices of the elderly this paper analyses the impact of medicaid home care benefits on the probability of nursing home entry and the use of formal and informal home care by disabled elderly remaining in the community using data from the national long term care survey i find evidence that medicaid home care subsidies reduced the probability of nursing home entry among at risk elderly using formal home care among non institutionalized persons the subsidy increased the use of formal home care but led to substitution of informal with formal care for services that were non medical in nature i introduction long term care for the elderly has become an area of great interest for policymakers due to the increased number of aged americans and to the important role of government in financing and regulating their care the size of the population requiring long term care is expected to increase from about 7 million in 1988 to about 18 million by the year 2040 it is popularly believed that the elderly often lack family support and must enter nursing homes when they become chronically ill in actuality the majority of impaired elderly remain at home only 22 percent of the disabled elderly population is institutionalized and the remaining 78 percent lives in the community most receiving assistance from family members of those remaining in the community 27 percent receive formal home and community based care to augment their informal care while 3 percent receive formal services only special committee on aging 1988 private insurance rarely covers longterm care since many of the elderly cannot afford prolonged out of pocket expenditures on nursing home or home health care the public sector ends up paying for it public long term care expenditures account for 0 45 percent of gnp with most of these expenditures going towards nursing home care with rapid inflation in the health care sector policymakers have been driven to explore alternatives to nursing home care which are potentially less costly one of these alternatives is home and community based care while the idea of expanding publicly financed home and community based care programs has been enthusiastically received by the elderly and their families researchers have questioned its cost effectiveness raising two issues the first concern is that extended home care benefits may not lower nursing home use but will primarily benefit persons who would not have entered a nursing home anyway the second possibility is that home care benefits will reduce reliance on informal caregiving if recipients use the formal care to substitute for rather than supplement the unpaid care they were already receiving much of the research on how formal home care affects the provision of informal home care and the use of nursing home services has focused on all forms of formal care including care paid for out of pocket two such studies are those by newman et al 1988 and hanley et al 1991 their results are likely to differ from those of an explicit analysis of the effects of a home care subsidy for example a family will purchase formal home care services as a substitute for their own informally provided care only if the opportunity cost of caregiving is greater than the cost of the paid care on the other hand if the formal care is essentially free to the recipients their families are likely to substitute formal care for their informal services even if the cost of the formal care to society is greater than the family s opportunity cost of caregiving thus home care subsidies are likely to lead to greater substitution of formal for informal care than we would observe in the absence of subsidization it is therefore misleading to extrapolate from this previous line of research to infer the effects of expanded government home care programs research concentrating on the subsidy effect itself has often been conducted through demonstration projects

standard errors for the retransformation problem with heteroscedasticity abstract economists often estimate models with a log transformed dependent variable the results from the log transformed model are often retransformed back to the unlogged scale other studies have shown how to obtain consistent estimates on the original scale but have not provided variance equations for those estimates in this paper we derive the variance for three estimates the conditional mean of y the slope of y and the average slope of y on the retransformed scale we then illustrate our proposed procedures with skewed health expenditure data from a sample of medicaid eligible patients with severe mental illness

the political economy of taking and just compensation by creating an implicit right to judicial review and lowering the transaction costs a property owner must incur to challenge a taking the just compensation restriction on eminent domain limits the tendency of political decision makers to avoid the subjective costs their actions inflict on property owners and moves the level of taking closer to the social optimum its impact however is partially to completely erased by the risk aversion of the property owner and the fiscal illusion of the political decision maker unless there are additional constraints in the fiscal constitution

financial risk protection from social health insurance this paper estimates the impact of social health insurance on financial risk by utilizing data from a natural experiment created by the phased roll out of a social health insurance program for the poor in india we estimate the distributional impact of insurance on of out of pocket costs and incorporate these results with a stylized expected utility model to compute associated welfare effects we adjust the standard model accounting for conditions of developing countries by incorporating consumption floors informal borrowing and asset selling which allow us to separate the value of financial risk reduction from consumption smoothing and asset protection results show that insurance reduces out of pocket costs particularly in higher quantiles of the distribution we find reductions in the frequency and amount of money borrowed for health reasons finally we find that the value of financial risk reduction outweighs total per household costs of the insurance program by two to five times

decriminalization and marijuana smoking prevalence evidence from australia this article uses the 2001 national drug strategy household survey to assess the impact of marijuana decriminalization policy on marijuana smoking prevalence in australia both parametric and nonparametric methods are used the parametric approach includes endogenous probit switching two part sample selection and standard dummy variable models while the nonparametric approach uses propensity score stratification matching specification analyses are also conducted a nonparametric kernel based test is constructed to select between parametric and nonparametric models and the likelihood ratio test is used to choose among parametric models our analyses favor the endogenous switching model where decriminalization increases the probability of smoking by 16 2

supply side and demand side cost sharing in deregulated social health insurance which is more effective abstract microeconomic theory predicts that if patients are fully insured and providers are paid fee for service utilization of medical services exceeds the efficient level moral hazard effect in switzerland both demand side and supply side cost sharing have been introduced to mitigate this problem analyzing a panel dataset of about 160 000 adults we find both types of cost sharing to be effective in curtailing the use of medical services however when moral hazard mitigation is traded off against risk selection the minimum deductible supply side cost sharing option ranks first followed by the medium deductible demand side alternative making the supply side option somewhat more effective

gender and the demand for medical care the consumption of a set of diverse medical services is analysed in an effort to determine the sources of high utilization by women unlike previous studies of gender and the demand for medical services the range of services investigate allows us to draw conclusions about the influence of physicians as agents we use a modified version of the almost ideal demand model in the emperical analysis which unlike the double log quadratic or linear demand models is consistent with constraints imposed by economic theory through decomposition of the variance it was found that if women reported the same series of health indicators as men their use of most services would fall below that of men

finance saving and investment in keynes economics in a very interesting paper on kalecki s and keynes s views on finance saving and investment asimakopulos has recently drawn attention to a similarity between kalecki s and keynes s economics which most economists have tended to overlook 1 not only is there reason to believe that both these authors held investment to be a key element in the determination of economic activity but there is also evidence that they gave a similar treatment of the finance required for an increase in investment besides discussing the latter similarity asimakopulos has criticised both kalecki s and keynes s discussions concerning finance he has in particular questioned the complete independence of saving and investment which he conceives to be assumed by both kalecki and keynes and has concluded that there may be limits related in some way to the propensity to save to the extent to which firms are in a position to increase their rate of investment even if short term credit is available to finance such an increase 2 in relation to this he has argued that contrary to what both kalecki and keynes have assumed finance will be a revolving fund only if the multiplier process subsequent to an increase in investment associated with the provision of finance has been completed two basic assumptions underlie asimakopulos s analysis first it is assumed that savings of an amount equal to ex ante savings must be available to pay the initiating credit and or to replace short term bank loans by long term bonds second and related to the first assumption it is assumed that ex ante savings at any point in time have to increase until they are equal to the new level of investment which requires the com pletion of the multiplier process then and only then the amount of the retired or repaid bank credit will suffice to make credit advances to keep financing the new level of investment asimakopulos therefore conceives of the keynesian claim that there will always be exactly enough saving to take up investment and to release the finance required for the new level of investment as being associated with a confusion between the equality of ex post saving and investment and the conditions for short period equilibrium 3

academic earmarks and the returns to lobbying abstract in this paper we estimate the returns to lobbying by universities to motivate our empirical work we develop a simple theoretical model of university lobbying for academic earmarks our statistical analysis shows that universities represented by a house appropriations committee hac or senate appropriations committee sac member spend less money on lobbying than those that are not represented in addition using instrumental variables estimations we show that universities without hac or sac representation may receive some benefit to lobbying for earmarks although in many estimations this benefit is not statistically different from zero however for universities with hac or sac representation a 10 percent increase in lobbying yields an additional 2 8 percent or 3 5 percent increase in earmarks respectively this suggests that there are large returns to lobbying for academic earmarks if a university is represented by a member of one the hac or sac but little or no return if not

the effect of physician advice on alcohol consumption count regression with an endogenous treatment effect although there are encouraging trends alcohol abuse continues to be a significant public health problem econometric studies of alcohol demand have yielded a great deal of information for alcohol abuse prevention policy these studies suggest that higher alcohol taxes and stricter drunk driving policies can reduce heavy drinking and drunk driving in this paper we explore the role physician advice plays in the campaign to prevent alcohol related problems compared to alcohol taxation physician advice is a more precisely targeted intervention that does not impose extra costs on responsible drinkers compared to the resource costs of arresting processing and punishing drunk drivers physician advice may be a lower cost intervention to provide a basis for alcohol policy analysis we use an alcohol demand framework to test whether physician provided information about the adverse consequences of alcohol abuse shifts demand to more moderate levels there are three aspects of our alcohol demand model that complicate the estimation 1 the dependent variable is non negative it is a count variable number of drinks consumed 2 a non trivial number of sample observations have zero values for the dependent variable and 3 because the data we use is non experimental the treatment variable indicating receipt of advice from a physician may be endogenous we implement an estimation method that is specifically designed to deal with these three complicating factors our results show that advice has a substantial and significant impact on alcohol consumption by males with hypertension and that failing to account for the endogeneity of advice masks this result copyright 2001 john wiley sons ltd

do informal risk sharing networks crowd out public voluntary health insurance evidence from vietnam many governments in low income countries have promoted voluntary health insurance schemes in recent years with the principal aim of improving access to services amongst those working in the informal economy few attempts to understand demand for such schemes exist particularly in light of the importance of informal social security arrangements for many households a model of demand for health insurance is developed reflecting this context and estimated using data from vietnam the results show that informal financial networks may crowd out government promoted health insurance implications for theory and policy are discussed

bayesian analysis of the two part model with endogeneity application to health care expenditure this paper studies the effect of managed care on medical expenditure using a model in which the insurance status is assumed to be endogenous insurance plan choice is modeled through the multinomial probit model the medical expenditure variable the outcome of interest has a significant proportion of zeros that are handled using the two part model extended to handle endogenous insurance the estimation approach is bayesian based on the gibbs sampler the model is applied to a sample of 20 460 individuals obtained from the medical expenditure panel survey the results provide substantial evidence of selectivity copyright 2006 john wiley sons ltd

eminent domain power and afterwards leviathan s post taking opportunism this paper investigates post taking procedures a research area not yet fully explored it discusses the economic implications underlying the landowner s repurchase right rr which can be invoked upon the occurrence of a so called change in use after taking rr is compared with the government s discretion regarding such changes the lack of post taking accountability tends to create power ripe for abuse and rr appears to be an effective device for constraining leviathan s opportunism finally a parsimonious estimation supports that under the overriding rr regime there exists the systematic post taking opportunism whereby original public projects are changed into inappropriate projects

censored quantile instrumental variable estimates of the price elasticity of expenditure on medical care efforts to control medical care costs depend critically on how individuals respond to prices i estimate the price elasticity of expenditure on medical care using a censored quantile instrumental variable cqiv estimator cqiv allows estimates to vary across the conditional expenditure distribution relaxes traditional censored model assumptions and addresses endogeneity with an instrumental variable my instrumental variable strategy uses a family member s injury to induce variation in an individual s own price across the conditional deciles of the expenditure distribution i find elasticities that vary from 0 76 to 1 49 which are an order of magnitude larger than previous estimates

post keynesian economics towards coherence this paper provides a comprehensive survey of post keynesian economics it argues that post keynesian economics has passed through the important initial stage of mounting a concerted critique of mainstream economics the focus however is on the stage reflected in current post keynesian research which the paper argues is concerned with elaborating a distinctive coherent approach that takes precedence over critique several traditions upon which post keynesian economics relies are identified institutionalism is proposed as an additional contributing tradition a novel aspect of the paper it is recognized however that more research is necessary to complete the post keynesian approach c 1996 academic press limited copyright 1996 by oxford university press

consumer health information and the demand for medical care this paper is an empirical investigation of consumer health information using a new direct measure of information the econometric approach treats both information and physician visits as endogenous variables when estimating the demand for medical care the results show that information increases the probability that a consumer uses medical care but that conditional on use the quantity of care consumed is not related to information the results contradict specific implications of models where physicians can create or induce demand for their own services several results suggest that poorly informed consumers tend to underestimate the productivity of medical care in treating illness copyright 1990 by mit press

the taking of land when should compensation be paid the analysis focuses on the question of whether the payment of compensation for land taken by eminent domain is efficient when the taking decision is independent of land use zero compensation is efficient but full compensation is not when the project decision is no longer independent of land use and can be affected by investor decisions neither compensation rule is generally efficient because of the moral hazard problem with risk averse consumers and risk neutral firms the previous conclusions remain essentially unchanged however when the project decision rule involves a budgetary fiscal illusion additional compensation may be necessary to correct the incentives facing the project decision maker

insurance moral hazard and chemical use in agriculture this paper examines how crop insurance affects corn farmers fertilizer and pesticide use in the u s midwest crop insurance might be expected to affect chemical use because of moral hazard insured farmers may undertake riskier production than do uninsured farmers results suggest that insurance exerts considerable influence on corn farmers chemical use decisions those purchasing insurance applied significantly more nitrogen per acre 19 spent more on pesticides 21 and treated more acreage with both herbicides and insecticides 7 and 63 than did those not purchasing insurance these results suggest that both fertilizer and pesticides may be risk increasing inputs

the price elasticity of opium in taiwan 1914 1942 abstract between 1895 and 1945 the japanese colonial government virtually eliminated opium use in taiwan by licensing and treating existing users prohibiting sales to others and raising the price we evaluate these policies using a two part model to describe the fraction of the population using opium and consumption among users and the rational addiction model by becker et al 1991 we confirm that opium is addictive and find no evidence supporting the rational addiction hypothesis demand is price elastic with estimated short and long run demand elasticities of 0 48 and 1 38 these results have implications for control of other addictive substances

effects of price and deductibles on medical care demand estimated from survey data this paper estimates the price sensitivity of medical care demand from cross sectional survey data by relating medical consumption to approximated copayment rates resulting from deductibles instead of the deductibles itself a transformation is used that better takes into account that expected expenditures at policy level play an important role in the reaction of consumers with regard to their deductible this transformation approximates the average expected copayment rate that is the portion of expenditures that one may expect at the beginning of the year to pay out of pocket given the deductible and given the expected expenditures at policy level the principal finding is an estimated price elasticity of medical care demand of 0 079 the highest price sensitivity was found for physiotherapy visits 0 12 and general practitioner visits 0 085 and the lowest for specialist visits 0 074 and prescription drugs 0 056 hospital care demand appeared not to be affected by deductibles

much ado about two reconsidering retransformation and the two part model in health econometrics in health economics applications involving outcomes y and covariates x it is often the case that the central inferential problems of interest involve e y x and its associated partial effects or elasticities many such outcomes have two fundamental statistical properties y 0 and the outcome y 0 is observed with sufficient frequency that the zeros cannot be ignored econometrically this paper 1 describes circumstances where the standard two part model with homoskedastic retransformation will fail to provide consistent inferences about important policy parameters and 2 demonstrates some alternative approaches that are likely to prove helpful in applications

physician ownership of complementary medical services abstract when physicians own complementary medical service facilities such as laboratories and imaging centers they gain financially by referring patients to these entities this creates an incentive for the physician to exploit patients trust by recommending more services than necessary using data from taiwan which introduced a separating policy that restricts physician ownership of pharmacies we estimate that where the policy was binding eliminating this incentive caused physicians to prescribe 7 1 less in drugs taking into account increases in complementary diagnostic services and that drugs are only a part of overall primary care spending the policy reduced total expenditures by 1 8 however a large number of clinics exploited a loophole in the law and either had at baseline or integrated pharmacies into their practices post policy making them exempt from the policy as a result the policy only reduced total drug expenditures by 2 1 and total primary care cost by 0 5

determinants of health care decisions insurance utilization and expenditures abstract this paper studies three interrelated health care decisions insurance utilization and expenditures the model treats insurance as an endogenous variable with respect to both utilization and expenditures addresses potential selection issues and takes into account that the decisions to use health care and the level of treatment are determined by different decision makers we employ semiparametric methods to avoid making distributional assumptions using the medical expenditure panel survey 2005 data the semiparametric approach predicts insurance to increase the level of expenditures by 48 a number in accord with an important experimental study and less than half that obtained using parametric methods

estimates of the demand for ethical pharmaceutical drugs across countries and time the aggregate demand for ethical pharmaceutical drugs using country level data for seven countries pooled across an eight year period is estimated the regression analysis reveals that the net price paid by consumers has a negative effect on the average number of prescriptions per capita while income has a positive effect moreover the parameter estimates suggest thst the demand is relatively elastic in most countries and that the income elasticity is greater than one

shifted deductibles for high risks more effective in reducing moral hazard than traditional deductibles in health insurance a traditional deductible i e with a deductible range 0 d is in theory not effective in reducing moral hazard for individuals who know ex ante that their expenditures will exceed the deductible amount d e g those with a chronic disease to increase the effectiveness this paper proposes to shift the deductible range to si si d with starting point si depending on relevant risk characteristics of individual i in an empirical illustration we assume the optimal shift to be such that the variance in out of pocket expenditures is maximized results indicate that for the 10 percent highest risks in our data the optimal starting point of a 1000 deductible is to be found far beyond 1200 which corresponds with a deductible range of 1200 2200 or further we conclude that compared to traditional deductibles shifted deductibles with a risk adjusted starting point lower out of pocket expenditures and may further reduce moral hazard

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

income distribution and consumer demand for health services the case of prescribed medicines in the usa the relationship between pharmaceutical expenditures and income is analysed for a sample of 7981 patients insured with a private plan extracted from the american national medical expenditures survey the influence of factors such as health status characteristics of group versus nongroup health plans and job stability profile on the income effect in the use of prescribed medicine is investigated it is found that the effect of income on pharmaceutical consumption is negative probably clinical and epidemiological factors as well as economic factors are taken into account in a measure such as income different income groups reflect therefore different patterns of use of pharmaceutical services the income effect is larger in the case of group plans than nongroup plans for patients with a poor health status the positive effect of health insurance on the remaining disposable income seems to lead to positive income effect on pharmaceutical use finally a positive income effect on drug use is observed for p

ordinary least squares and sample selection models of health care demand monte carlo comparison this article examines alternative econometric models for health care demand estimation the analysis compares the rand health insurance study two part model with sample selection model estimators in a monte carlo simulation experiment designed to approximate individual level health care demand conditions the underlying variable distributions are taken from cross sectional data for a swiss 1981 population survey three sets of error distribution assumptions are examined bivariate normal normal logistic and cauchy despite theoretical concerns with the two part model it outperforms the sample selection model in terms of mean squared error of parameter estimate

alternative models of choice under uncertainty and demand for health insurance the authors test a standard expected utility model and alternative models about how people evaluate risky prospects using data about individuals preferences among health insurance plans a model that assumes people evaluate gains and losses relative to a reference rather than final outcomes treat gains and losses asymmetrically and process certain and uncertain outcomes separately provides a better fit than the standard utility model these findings suggest inertia in health insurance plan choice and that individuals are more responsive to decreases than to increases in the price of insurance copyright 1996 by mit press

the demand for preventive medical care the idea that people invest in health capital is an essential part of models of the demand for health but the investment motives behind health decision are often obscured by other factors this empirical paper investigates the demand for adult preventive medical care where the investment motives are relatively clear cut several important results demonstrate the usefulness of the approach first the analysis finds that annual use of two preventive services decreases with age although not the only plausible explanation the results are consistent with individuals shortens over the lifecycle second schooling is found to be an important determinant of demand with the more educated much more likely to use the services neither lifecycle nor schooling effects are consistently found in studies of the demand for culture care finally the empirical analysis also provides additional evidence on the responsiveness of the demand for preventive care to change in insurance coverage an important issue for heal

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

demand for medical care by the elderly a finite mixture approach summary in this article we develop a finite mixture negative binomial count model that accommodates unobserved heterogeneity in an intuitive and analytically tractable manner this model the standard negative binomial model and its hurdle extension are estimated for six measures of medical care demand by the elderly using a sample from the 1987 national medical expenditure survey the finite mixture model is preferred overall by statistical model selection criteria two points of support adequately describe the distribution of the unobserved heterogeneity suggesting two latent populations the healthy and the ill whose fitted distributions diaer substantially from each other 1997 by john wiley sons ltd

on the effect of income and relative price on demand for health care ec evidence this paper demonstrates that the relative price of health care could be used to explain the conflicting results of the empirical studies which attempt to measure the income elasticity of demand our empirical results based on a conventional model and cross national data set for the ec show that whereas health care may be labelled as a luxury good the large income effect can be interpreted as merely offsetting the price effect

some reflections on keynes s finance motive for the demand for money this essay offers a fresh interpretation of keynes s finance motive some competing interpretations are assessed which it is argued are inconsistent with the conceptual framework of keynes s monetary analysis the finance motive is interpreted as an intrinsically dynamic conception which displays important aspects of keynes s monetary thought not brought out in the current macroeconomic paradigm the essay attempts to show that liquidity preference theory should be understood in a dynamic context as a theory of financial intermediation 1995 academic press limited

does regulation drive out competition in pharmaceutical markets abstract most countries regulate pharmaceutical prices either directly or indirectly on the assumption that competition is at best weak in this industry this paper tests the hypothesis that regulation of manufacturer prices and retail pharmacy margins undermines price competition we use data from seven countries for 1992 to examine price competition between generic competitors different manufacturers of the same compound and therapeutic substitutes similar compounds under different regulatory regimes we find that price competition between generic competitors is significant in unregulated or less regulated markets united states united kingdom canada and germany but that regulation undermines generic competition in strict regulatory systems france italy and japan regulation of retail pharmacy further constrains competition in france germany and italy regulation thus undermines the potential for significant savings on off patent drugs which account for a large and growing share of drug

setting health plan premiums to ensure efficient quality in health care minimum variance optimal risk adjustment abstract risk adjustment refers to the practice of paying health plans a premium per person or per family based on a formula using risk adjusters such as age or gender and weights on those adjusters one role of risk adjustment is to make sure plans have an incentive to accept all potential enrollees another role at least as important in our view is to lead health plans to choose the efficient level of quality of care for the various services they offer most of the research and policy literature on risk adjustment focuses on the first problem this paper proposes a new way to calculate weights in a risk adjustment formula that contends with both problems for a given set of adjusters we identify the weights that minimize the variance in plan predictable health care costs that are not explained by risk adjustment addressing the access problem subject to the payments satisfying conditions for an optimal risk adjuster making sure plans provide the efficient quality we call the formula minimum variance optimal risk adjustment mvora

ageing chronic conditions and the evolution of future drugs expenditure a five year micro simulation from 2004 to 2029 the healthy ageing assumptions may lead to substantial changes in paths of aggregate health care expenditure notably catastrophic expenditure of people at the end of the life but clear assessments of involved amounts are not available when we specifically consider ambulatory care as drug expenditure generally offered to chronically ill people we estimate the effects of epidemiological and life expectancy changes on french health expenditure until 2029 by applying a markovian micro simulation model from a nationally representative database the originality of these simulations holds in using an aggregate indicator of morbidity mortality capturing vital risk and making it possible to adapt the quantification of life expectancies by taking into account the presence of severe chronic pathologies we forecast future national drugs expenditure under different epidemiological scenarios of chronic morbidity trend scenario healthy ageing scenario and medical progress scenario for the population aged 25

the potential impact of tobacco biopharming the case of human serum albumin biopharming stands to significantly expand the uses of many agricultural crops this article examines the potential size and distribution of welfare gains from biopharming transgenic tobacco as a source of human serum albumin hsa using an economic surplus model under imperfect competition the results suggest that hsa from transgenic tobacco will generate annual profits for the innovating firm of between 25 million and 49 million on the other hand consumers are unlikely to benefit during the patent life of the product given the innovator s market power

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

household use of agricultural chemicals for soil pest management and own labor for yard work in spite of its potential health and environmental risks and contribution to agribusiness the use of agricultural chemicals for yard care has not been well studied in our discrete continuous choice model estimated with data from a national survey a household chooses how much money if any to initially spend on types of agricultural chemicals and applicators and how much time to subsequently spend on other yard work households in big cities or with large gardens are more likely to use organic chemicals the probability that a household chooses a mix of do it yourself and hired applications of synthetic chemicals increases with income age and the presence of preschoolers among households that apply only synthetic chemicals without hired help those with young children with higher incomes in big cities and with male heads spend more on the chemicals the time that such households spend on other yard work increases with expenditures on the chemicals cancellation of a pesticide registration might create an extra private cost for households with young children even though the ban might reduce external costs

estimates of the demand for medical care under different functional forms we estimate price and income elasticities from a linear log linear and the almost ideal demand model with and without an adjustment for selectivity bias in an effort to show that special attention should be paid to the underlying assumptions of consumer behaviour when estimating a medical care demand model the literature on medical care utilization is extended by incorporating two major components of spending as separate demands in a system of medical care spending we find that estimates of elasticities vary depending on the functional form of the estimating equation thus questioning the usefulness for policy purposes of single estimates of elasticities

the threat of cream skimming in the post reform nhs the allocation of budgets to general practitioners to enable them to purchase selected hospital services has been one of the most imaginative elements of the recent national health service reforms in britain however reliance on historic costs budgeting has weakened the efficiency incentives of fund holding while perpetuating the large variations in resource use endemic in general practice on the other hand policy changes aimed to introduce elements of capitation funding although welcome raise the spectre of cream skimming the paper explores the potential for protection against cream skimming offered by incorporating chronic health factors into the formula

private insurance subsidies and public health care markets evidence from canada in this study i examine the effects of government subsidies to employer provided health insurance on the decision to purchase insurance and on utilization of publicly funded health services using unique variation in tax subsidies across canadian provinces as an instrument i estimate the effects of these subsidies on the demand for supplemental health insurance and their extended effects on the decision to use publicly funded health services my results show that government subsidies through tax exemptions have significant effects on the decision to purchase insurance furthermore additional insurance policies lead to moral hazard in the use of publicly funded health services jel classification h2 h4 11

causality and interdependence in pasinetti s works and in the modern classical approach the formal representation of economic theories normally takes the form of a model that is a system of equations which connect the endogenous variables with the values of the parameters which are taken as given sometimes it is possible to identify one or more equations which are able to determine a subset of endogenous variables priorly and independently of the other equations and of the value taken by the remaining variables of the system the first group of equations and variables are thus said to determine causally the remaining variables in pasinetti s works this notion of causality has often been emphasized as a formal property having the burden to convey some deep economic meaning in this work we will go through those pasinetti s works where this notion of causality plays a central role with the purpose to contextualize it within the econometric debate of the sixties to enucleate its economic meaning and to show its connections with other fields of the modern classical approach

a causal interpretation of extensive and intensive margin effects in generalized tobit models the usual decomposition of effects in corner solution models into extensive and intensive margins is generally incompatible with a causal interpretation this paper proposes a decomposition based on the joint distribution of potential outcomes which is meaningful in a causal sense the difference between decompositions can be substantial and yield diametrically opposed results as shown in a standard tobit model example in a generalized tobit application exploring the effect of reducing firm entry regulation on bilateral trade flows between countries estimates suggest that using the usual decomposition would overstate the contribution of the extensive margin by around 15

a comparison of alternative models for the demand for medical care we have tested alternative models of the demand for medical care using experimental data the estimated response of demand to insurance plan is sensitive to the model used we therefore use a split sample analysis and find that a model that more closely approximates distributional assumptions and uses a nonparametric retransformation factor performs better in terms of mean squared forecast error simpler models are inferior either because they are not robust to outliers e g anova anocova or because they are inconsistent when strong distributional assumptions are violated e g a two parameter box cox transformation

the heckman correction for sample selection and its critique this paper gives a short overview of monte carlo studies on the usefulness of heckman s 1976 1979 two step estimator for estimating selection models such models occur frequently in empirical work especially in microeconometrics when estimating wage equations or consumer expenditures it is shown that exploratory work to check for collinearity problems is strongly recommended before deciding on which estimator to apply in the absence of collinearity problems the full information maximum likelihood estimator is preferable to the limited information two step method of heckman although the latter also gives reasonable results if however collinearity problems prevail subsample ols or the two part model is the most robust amongst the simple to calculate estimators

price and welfare effects of a pharmaceutical substitution reform the price effects of the swedish pharmaceutical substitution reform are analyzed using data for a panel of all pharmaceutical product sold in sweden in 1997 2007 the price reduction due to the reform was estimated to average 10 and was found to be significantly larger for brand name pharmaceuticals than for generics the results also imply that the reform amplified the effect that generic entry has on brand name prices by a factor of 10 results of a demand estimation imply that the price reductions increased total pharmaceutical consumption by 8 and consumer welfare by sek 2 7 billion annually

tax credits insurance and the use of medical care the personal income tax systems in canada the united states and elsewhere permit deductions or tax credits for out of pocket health care expenditures and private medical insurance premiums little is known about the effects of such tax measures on individual behaviour in contrast to the extensive research on the tax exemption for employer provided health insurance in this paper we exploit variation in the after tax cost of health expenditures under the tax law to estimate the tax price elasticity of demand for prescription drugs health insurance and other eligible expenditures we find evidence of moderate to large tax price elasticities compared with traditional point of service price elasticity estimates despite the apparent differences in the way tax subsidies are experienced by consumers in contrast we find no evidence the tax subsidy affects demand for health insurance on the intensive margin which we show is consistent with the theory of optimal self insurance we discuss the implications of our results for recent proposals to reform public and private health insurance systems jel classification i1 h2 credits d impot assurance et l utilisation des soins medicaux les systemes d impot sur le revenu des particuliers au canada aux etats unis et ailleurs permettent des deductions ou credits d impot pour les depenses directes en soins de sante assumees par les particuliers ou pour les primes d assurance privee on connait mal les effets de ces mesures fiscales sur le comportement des personnes par comparaison avec les resultats extensifs de la recherche sur les effets des exemptions fiscales pour l assurance sante fournie par les employeurs dans ce texte on utilise la variation dans le fardeau des depenses pour la sante apres impot selon les diverses juridictions pour evaluer l elasticite de la demande de medicaments d ordonnance de l assurance sante et d autres depenses eligibles en reponse a des differences de prix fiscaux on decouvre que l ordre de grandeur des elasticite se situe entre moderee et grande quand on les compare aux evaluations des elasticites traditionnelles de la demande aux points de service par rapport aux prix et ce malgre les differences apparentes dans les experiences de ces subventions fiscales pour les consommateurs d autre part on ne trouve pas de support pour l hypothese que les subventions fiscales affectent la demande d assurance santea la marge intensive ce qui concorde bien avec ce que nous enseigne la theorie de l auto assurance optimale on discute les implications de ces resultats pour certaines reformes recentes proposees aux systemes d assurance sante prives et publics

competitive production and increases in risk the theory of the firm is a monumental achievement of neoclassical economics without this engine of analysis it would be difficult if not impossible to comprehend the pricing output and input decisions of firms as they respond to routine events like the imposition of a tax the opening of a new market a technical innovation and a sudden shortage of a key factor of production it is remarkable that this theory has been successful in explaining behavior that to a large extent is motivated by both profit and risk when the theory itself has only explicitly considered the profit motive this is not the place to dwell on the evolution of economic theory it suffices to note that there are many important economic phenomena that the purely deterministic theory does not explain the purpose of this note is to elucidate the way in which risk influences the output decisions of riskaverse entrepreneurs and the number of riskneutral firms in a competitive industry in both cases the predicted behavior differs from that of the deterministic theory in our study we shall restrict attention to the behavior of firms in a single period 2 setting the firm has no control over price and because storage makes no sense simply sells all of its output at the going price the source of uncertainty is the requirement that the firm produce before price is known where the price is a random variable with a known probability distribution the firm chooses output to maximize its expected utility it is well known that in the presence of uncertainty the optimal output of the risk averse firm is less than that of the riskneutral firm moreover increases in risk aversion in the sense of arrow and john pratt lead to further diminutions in output on the other hand for a fixed degree of risk aversion the change in output induced by a mean preserving increase in risk depends on the shape of the cost curve as well as the sign of the third derivative of the utility function u and the sign of the second derivative of qu q next competitive industry behavior under uncertainty is analyzed in order to isolate the effect of uncertainty firms are assumed to be risk neutral we show that both the optimal number of firms in the industry and excess capacity increase as industry output becomes riskier results like this are important for probabilistic economics for it would be unfortunate if the vitality of the stochastic theory of the firm relied solely on the controversial assumption of risk aversion 3