One of the most intractable problems in international health research is the lack of comparability of health measures across countries or cultures. We develop a cross-country measurement model for health in which functional limitations, self-reports of health, and a physical measure are interrelated to construct health indices. To establish comparability across countries, we define the measurement scales by the physical measure while other parameters vary by country to reflect cultural and linguistic differences in response patterns. We find significant cross-country variation in response styles of health reports along with variability in genuine health that is related to differences in national income. Our health indices achieve satisfactory reliability of about 80% and their gradients by age, income, and wealth for the most part show the expected patterns. Moreover, the health indices correlate much more strongly with income and net worth than self reported health measures.

We examine the link between employment status and suicide risk using a panel of US states from 1996 to 2005 with monthly data on suicides, the duration of unemployment spells and the number of job losses associated with mass layoff events. The use of aggregate data at the monthly level along with the distribution of unemployment duration allows us to separate the effect of job loss from the effect of unemployment duration, an important distinction for policy purposes, especially for the timing of potential interventions. Our results are consistent with unemployment duration being the dominant force in the relationship between job loss and suicide. Nevertheless, mass layoffs may be powerful localized events where suicide risk increases shortly afterward. Implications for the design of unemployment insurance are discussed.

This paper argues that health economists should consider the costs and benefits of preventing rather than treating disease. It sketches a developmental approach to health that examines the costs and benefits of interventions over the life cycle.

SUMMARY

Reduced crime provides a key benefit associated with substance abuse treatment (SAT). Armed robbery is an especially costly and frequent crime committed by some drug-involved offenders. Many studies employ valuation methods that understate the true costs of robbery, and thus the true social benefits of SAT-related robbery reduction. At the same time, regression to the mean and self-report bias may lead pre–post comparisons to overstate crime reductions associated with SAT.

Using 1992–1997 data from the National Treatment Improvement Evaluation Study (NTIES), we examined pre–post differences in self-reported robbery among clients in five residential and outpatient SAT modalities. Fixed-effect negative binomial regression was used to examine incidence rate reductions (IRR) in armed robbery. Published data on willingness to pay to avoid robbery were used to determine the social valuation of these effects. Differences in IRR across SAT modalities were explored to bound potential biases.

All SAT modalities were associated with large and statistically significant reductions in robbery. The average number of self-reported robberies declined from 0.83/client/year pre-entry to 0.12/client/year following SAT (p < 0.001). Under worst-case assumptions, monetized valuations of reductions in armed robbery associated with outpatient methadone and residential SAT exceeded economic costs of these interventions. Conventional wisdom posits the economic benefits of SAT. We find that SAT is even more beneficial than is commonly assumed.

New evidence suggests that individuals do not always make rational decisions, especially with regard to health habits. Smoking, misuse of alcohol, overeating and illicit drug use are leading causes of morbidity and mortality. Thus, influencing health habits is critical for improving overall health and well-being. This editorial argues that economists should take a more active role in shaping individuals’ health habits.

Two recent innovations in economic theory pave the way. One change is that some economists now view rationality as bounded and willpower in short supply. Another, related to the first, is a more accepting perspective on paternalism, authorizing economists to help individuals make better choices when the neoclassical model breaks down. Findings from psychology offer incentive-based approaches; specifically, contingency management (CM). Economists could use this approach as a basis for developing public and private policies.

We estimate a health investment equation, derived from a health capital model that is an extension of the well-known Grossman model. Of particular interest is whether the health production function has constant returns to scale, as in the standard Grossman model, or decreasing returns to scale, as in the Ehrlich-Chuma model and extensions thereof. The model with decreasing returns to scale has a number of theoretically and empirically desirable characteristics that the constant returns model does not have. Although our empirical equation does not point-identify the decreasing returns to scale curvature parameter, it does allow us to test for constant versus decreasing returns to scale. The results are suggestive of decreasing returns and in line with prior estimates from the literature. But when we attempt to control for the endogeneity of health by using instrumental variables, the results become inconclusive. This brings into question the robustness of prior estimates in this literature.

The time trade-off is widely used in population-based surveys to estimate health-state valuations. Typically, respondents may characterize states as being better than or worse than dead. However, worse-than-dead responses can produce strongly negative mean values, so various analytic transformations of these responses have been suggested. The episodic random utility model (eRUM), operationalized using a linear regression estimator, was proposed as an alternative to these transformations, in part because of its theoretical appeal. We analyzed the eRUM estimator’s mathematical properties and found that it violates monotonicity under certain patterns of survey responses, such that improvement in some individual valuations would imply a lower overall valuation for a given health state. Consequently, it is possible that orderings of alternative strategies based on eRUM valuations could lead a decision-maker to choose a strictly dominated strategy. Re-analyzing data from a large population-based EQ-5D valuation survey in the United Kingdom, we found 27% of all time trade-off responses (63% of all worse-than-dead responses) met the conditions for violation of monotonicity, and 74% of all respondents had at least one such response. These results present some challenge to the use of the eRUM estimator in generating health-state valuations for population health measurement and economic evaluation.

In this paper, we present evidence on the health effects of a health insurance intervention targeted to poor children using data from a randomized policy experiment known as the Quality Improvement Demonstration Study (QIDS). Among study participants, using a difference-in-difference regression model, we estimated a 9-12 and 4-9 percentage point reduction in the likelihood of wasting and having an infection, as measured by a common biomarker C-reactive Protein, respectively. Interestingly, these benefits were not apparent at the time of discharge; the beneficial health effects were manifest several weeks after release from the hospital.

SUMMARY

The primary statistical challenge that must be addressed when using cross-sectional data to estimate the consequences of consuming addictive substances is the likely endogeneity of substance use. While economists are in agreement on the need to consider potential endogeneity bias and the value of instrumental variables estimation, the selection of credible instruments is a topic of heated debate in the field. Rather than attempt to resolve this debate, our paper highlights the diversity of judgments about what constitutes appropriate instruments for substance use based on a comprehensive review of the economics literature since 1990. We then offer recommendations related to the selection of reliable instruments in future studies.

This essay discusses research on incentive-based interventions to promote healthy behavior change, contingency management (CM) and conditional cash transfers (CCT). The overarching point of the essay is that CM and CCT are often treated as distinct areas of inquiry when at their core they represent a common approach. Some potential bi-directional benefits of recognizing this commonality are discussed. Distinct intellectual traditions probably account for the separate paths of CM and CCT to date, with the former being rooted in behavioral psychology and the latter in microeconomics. It is concluded that the emerging field of behavioral economics, which is informed by and integrates principles of each of those disciplines, may provide the proper conceptual framework for integrating CM and CCT.

SUMMARY

The number of Americans who are overweight or obese has reached epidemic proportions. Elevated weight is associated with health problems and increased medical expenditures. This paper analyzes Waves 1 and 2 of the National Epidemiological Survey of Alcohol and Related Conditions (NESARC) to investigate the role of alcohol consumption in weight gain. Alcohol is not only an addictive substance but also a high-calorie beverage that can interfere with metabolic function and cognitive processes. Because men and women differ in the type and amount of alcohol they consume, in the biological effects they experience as a result of alcohol consumption, and in the consequences they face as a result of obesity, we expect our results to differ by gender. We use first-difference models of body mass index (BMI) and alcohol consumption (frequency and intensity) to control for time-invariant unobservable factors that may influence changes in both alcohol use and weight status. Increasing frequency and intensity of alcohol use is associated with statistically significant yet quantitatively small weight gain for men but not for women. Moreover, the first-difference results are much smaller in magnitude and sometimes different in sign compared to the benchmark pooled cross-sectional estimates.

This study uses the second National Family Health Survey (NFHS-2) of India to estimate the effect of state-level public health spending on mortality across all age groups, controlling for individual, household, and state-level covariates. We use a state’s gross fiscal deficit as an instrument for its health spending. Our study shows a 10 % increase in public spending on health in India decreases the average probability of death by about 2%, with effects mainly on the young, the elderly, and women. Other major factors affecting mortality are rural residence, household poverty, and access to toilet facilities.

There is a debate about the extent to which the effect of prenatal smoking on infant health outcomes is causal. Poor outcomes could be attributable to mother characteristics which are correlated with smoking. I examine the importance of selection on the effect of prenatal smoking by using three British cohorts where the mothers’ knowledge about the harms of prenatal smoking varied substantially. I find that the effect of smoking on the probability of a low birth weight birth conditional on gestation is slightly more than twice as large in 2000 compared to 1958, implying that selection could explain as much as 50 percent of the current association between smoking and birth outcomes.

Summary

Background

Research on self-care for chronic disease has not examined time requirements. TRIAD, a multi-site study of managed care patients with diabetes, is among the first to assess self-care time.

Objective

To examine associations between socioeconomic position and extra time patients spend on foot care, shopping/cooking, and exercise due to diabetes.

Data

11,927 patient surveys from 2000–01.

Methods

Bayesian two-part models were used to estimate associations of self-reported extra time spent on self-care with race/ethnicity, education, and income, controlling for demographic and clinical characteristics.

Results

Proportions of patients spending no extra time on foot care, shopping/cooking and exercise were respectively 37%, 52% and 31%. Extra time spent on foot care and shopping/cooking was greater among racial/ethnic minorities, less-educated and lower-income patients. For example, African-Americans were about 10 percentage points more likely to report spending extra time on foot care than whites and extra time spent was about three more minutes/day.

Discussion

Extra time spent on self-care was greater for socioeconomically disadvantaged patients than for advantaged patients, perhaps because their perceived opportunity cost of time is lower or they cannot afford substitutes. Our findings suggest that poorly controlled diabetes risk factors among disadvantaged populations may not be attributable to self-care practices.

SUMMARY

We examine the extent to which infant health production functions are sensitive to model specification and measurement error. We focus on the importance of typically unobserved but theoretically important variables (typically unobserved variables, TUVs), other non-standard covariates (NSCs), input reporting, and characterization of infant health. The TUVs represent wantedness, taste for risky behavior, and maternal health endowment. The NSCs include father characteristics. We estimate the effects of prenatal drug use, prenatal cigarette smoking, and First trimester prenatal care on birth weight, low birth weight, and a measure of abnormal infant health conditions. We compare estimates using self-reported inputs versus input measures that combine information from medical records and self-reports. We find that TUVs and NSCs are significantly associated with both inputs and outcomes, but that excluding them from infant health production functions does not appreciably affect the input estimates. However, using self-reported inputs leads to overestimated effects of inputs, particularly prenatal care, on outcomes, and using a direct measure of infant health does not always yield input estimates similar to those when using birth weight outcomes. The findings have implications for research, data collection, and public health policy.

Given the public goods nature of research, economic research on health in developing countries is likely to have the highest returns by focusing, inter alia, on diseases and health conditions that are relatively widespread and costly and that are relatively rapidly growing. This article first summarizes the time patterns in economic research on diseases and health in developing countries for 1990–2005. It then compares those time patterns with the distribution of DALYS for diseases and health conditions in developing countries estimated for 2005 and for 2030. These comparisons suggest relatively overemphasis on HIV/AIDS and underemphasis on noncommunicable diseases. This opens the possibility for individuals or organizations initiating, re-evaluating or increasing their economic research on health and development to make a significant contribution by focusing particularly on the analysis of behaviour and policy choices related to non-communicable diseases. Careful consideration must, of course, be given to other demands, but on the basis of these two criteria, potential contributions are likely to be greatest from research with such a focus.

SUMMARY

Depression is a common condition among patients with HIV. This paper uses panel data for 1,234 participants from the Women’s Interagency HIV Study (WIHS) to estimate the effect of antidepressant use on the likelihood of being employed among women receiving highly active antiretroviral therapy (HAART) in the United States from 1996 to 2004. We show that naïve regressions of antidepressant use on employment generally result in negative or non-significant coefficients, whereas the instrumental variables approach shows a positive and significant effect of antidepressant use on the employment probability of women living with HIV. We use instrumental variables to predict antidepressant use independently of outcomes; thus, addressing potential biases (e.g., more depressed women are more likely to receive antidepressant treatment, but they are also more likely to be unemployed). The results are consistent for linear (random and fixed effects) as well as non-linear (bivariate probit) specifications. Among women receiving HAART, and controlling for individual and local area labor market characteristics, the use of antidepressants is associated with a 29-percentage-point higher probability of being employed. Improved efforts to test, diagnose and treat depression among HIV-positive patients may improve not only clinical indicators but also labor market outcomes.

SUMMARY

The value of a health state may depend on how long an individual has had to endure the health state (i.e. hedonic load). In this paper, we test the constant proportionality (CP) assumption and determine the sign of relationship between duration and health state value for 42 health states using the nationally representative data from the United Kingdom Measurement and Valuation of Health study. The results reject the CP assumption and suggest that the relationship is negative for optimal health (i.e. fair innings argument) and that the relationship is positive for poorer health states (i.e. adaptation). We find no evidence of the maximum endurable time hypothesis using these data. This evidence on the duration effect has important implications for outcomes research and the economic evaluation of interventions.

SUMMARY

The impact of market concentration has been little studied in markets for ambulatory care in the developing world, where the retail sector often accounts for a high proportion of treatments. This study begins to address this gap through an analysis of the consumer market for malaria treatment in rural areas of three districts in Tanzania. We developed methods for investigating market definition, sales volumes and concentration, and used these to explore the relationship between antimalarial retail prices and competition.

The market was strongly geographically segmented and highly concentrated in terms of antimalarial sales. Antimalarial prices were positively associated with market concentration. High antimalarial prices were likely to be an important factor in the low proportion of care seekers obtaining appropriate treatment.

Retail sector distribution of subsidised antimalarials has been proposed to increase the coverage of effective treatment, but this analysis indicates that local market power may prevent such subsidies from being passed on to rural customers. Policymakers should consider the potential to maintain lower retail prices by decreasing concentration among antimalarial providers and recommending retail price levels.

This paper investigates to what extent psychiatric disorders and mental distress affect labor market outcomes in two rapidly growing populations that have not been studied to date – ethnic minorities of Latino and Asian descent, most of whom are immigrants. Using data from the National Latino and Asian American Study (NLAAS), we examine the labor market effects of having any psychiatric disorder in the past 12 months as well as the effects of experiencing psychiatric distress in the past 12 months. The labor market outcomes analyzed are current employment status, the number of weeks worked in the past year among those who are employed, and having at least one work absence in the past month among those who are employed. Our results show that among Latinos, psychiatric disorders and mental distress are associated with large, detrimental effects on employment and absenteeism, similar to effects found in analyses of mostly white, American born populations. Among Asians, we find more mixed evidence that psychiatric disorders and mental distress detract from labor market outcomes.