Economics 770 Health Economics Department of Economics Emory University Prof. Sara Markowitz Rich Memorial Building Room 306G Phone: 404-712-8167 Email: [email protected] Office hours: Tues 9:00-12:00, or stop by whenever my door is open. Course Description: This course is designed to introduce graduate students in economics to the field of Health Economics. The provision of health care and the production of health have different institutional properties and incentives than other consumer goods, making health-related markets unique topics for study. This course will focus on the demand-side of health, emphasizing the difference between health as an outcome and medical care as one of many inputs into the production of health. Course Requirements: Students will be responsible for class presentations of articles, an empirical project, and a term paper. Each item is worth 1/3 of your grade. Students are also expected to come to class having read the material and contribute to class discussions. Readings: Most of the course material will come from articles that are available for downloading through the Emory library. Students who wish to write a dissertation in Health Economics may wish to purchase the following: Culyer, Anthony J., and Newhouse, Joseph P. Handbook of Health Economics, Volumes 1A and 1B. Amsterdam: North-Holland, Elsevier Science, 2000. You can access all the papers in the Handbook from the library database page. Search for the title via Science Direct. For those new to the topic, the following undergraduate/Master’s level text provides a solid overview of many of the topics: Folland, S., A.C. Goodman, and M. Stano. The Economics of Health and Health Care. 5th edition. Upper Saddle River, New Jersey: Prentice Hall, 2007.

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INTRODUCTION Arrow, K. 1963. “Uncertainty and the Welfare Economics of Medical Care” American Economic Review, 53(5), 941-73. Pauly, M. 2001. Forward to Symposium on Kenneth Arrow. Journal of Health Politics, Policy and Law 26(5), 829-834. (Relates Arrow’s paper to today’s world.) Fuchs, V.R. 1972. “Health Care and The United States Economic System: An Essay in Abnormal Physiology.” Milbank Memorial Fund Quarterly, 50(2), 211-232.

HOUSEHOLD PRODUCTION THEORY/PRODUCTION OF HEALTH Michael, Robert T., and Becker, Gary S. 1973. “On the New Theory of Consumer Behavior.” Swedish Journal of Economics, 75( 4), 378-396. (Explanation of theory of household production.) Becker, Gary S. 1965. “A Theory of the Allocation of Time.” Economic Journal, 75( 299), 493-517. (This is the original article, but the theory is more clearly explained in Michael and Becker 1973) Grossman Model of the Demand for Health: Grossman, Michael. The Demand for Health: A Theoretical and Empirical Investigation. New York: Columbia University Press for the National Bureau of Economic Research, 1972. (Download from http://www.nber.org/books/gros72-1) Grossman, Michael. “The Human Capital Model.” Chapter 7 in Handbook of Health Economics. (Contains much of the original monograph, plus some new material.) Grossman, Michael. (1972). “On the Concept of Health Capital and the Demand for Health.” Journal of Political Economy, 80(2), 223-255. (This paper is based on the first two chapters of the NBER monograph). Wagstaff, Adam. (1986). “The Demand for Health: Theory and Applications”. Journal of Epidemiology and Community Health, 40(1), 1-11. (Graphic presentation of Grossman’s pure consumption model.) Criticisms and Extensions of the Grossman Model (These are for your information only. We will not cover these in class.) Zweifel, P. (2012) “The Grossman Model after 40 Years.” European Journal of Health Economics. 13:677-682. Muurinen, Jaana-Marja. (1982). “Demand for Health: A Generalized Grossman Model.” Journal of Health Economics, 1(1), 5-28. Ehrlich, Isaac, and Chuma, Hiroyuki. (1990) “A Model of the Demand for Longevity and the Value of Life Extension.” Journal of Political Economy, 98(4), 761-782. Ried, Walter. (1998) “Comparative Dynamic Analysis of the Full Grossman Model.” Journal of Health Economics, 17(4), 383-425.

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Eisenring, Christoph. (2000) “Is There a Trade-off between Longevity and Quality of Life in Grossman’s Pure Investment Model?” Health Economics 9(8), 669-680. Goodman AC, Stano M, Tilford JM (1999). Applications and extensions of the Grossman health care model. Southern Economic Journal, 65:791-806.

Examples of Estimates of Health Production Functions Rosenzweig, Mark R., and Schultz, T. Paul. (1983). “Estimating a Household Production Function: Heterogeneity, the Demand for Health Inputs, and their Effects on Birth Weight. “Journal of Political Economy, 91(5), 723-746. Corman, Hope, Joyce, Theodore J., and Grossman, Michael. (1987) “Birth Outcome Production Functions in the U.S.” Journal of Human Resources, 22(3), 339-360. Leibowitz, A. (2004). “The Demand for Health and Health Concerns After 30 Years” Journal of Health Economics, 23(4), 663-671. Almond, D., K. Chay and D. Lee. (2005). “The Costs of Low Birthweight” Quarterly Journal of Economics, 120(3), 1031-83.

HEALTH AND SCHOOLING Schooling Causes Health Farrell, Philip, and Fuchs, Victor R. (1982) “Schooling and Health: the Cigarette Connection.” Journal of Health Economics, 1(3), 217-230. Kenkel, Donald S. (1991) “Health Behavior, Health Knowledge, and Schooling.” Journal of Political Economy, 99(2), 287-305. Sander, William. (1995) “Schooling and Quitting Smoking.” Review of Economics and Statistics, 77(1), 191-199. Lleras-Muney, Adriana. (2005) “The Relationship Between Education and Adult Mortality in the United States.” Review of Economic Studies, 72(1), 198-221. Chou, Shin-Yi; Liu, Jin-Tan; Grossman, Michael; and Joyce, Theodore J. “Parental Education and Child Health: Evidence from a Natural Experiment in Taiwan.” American Economic Journal: Applied Economics, January 2010, v. 2, iss. 1, pp. 33-61. Atlas, Steven J. and Jonathan S. Skinner (2009) “Education And The Prevalence Of Pain” NBER Working Paper 14964 [http://www.nber.org/papers/w14964] McCrary, Justine and Heather Royer (2011) “The Effect of Female Education on Fertility and Infant Health” Evidence from School Entry Policies Using Exact Date of Birth. American Economic Review, 101:1, 158-195.

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Health Causes Schooling Currie Janet and Rosemary Hyson. (1999) “Is the Impact of Health Shocks Cushioned by Socioeconomic Status? The Case of Low Birth Weight.” American Economic Review Papers and Proceedings. 89(2), 245-250. Perri, T.J. (1984). “Health Status and Schooling Decisions of Young Men.” Economics of Education Review, 3(3), 207-213. Oreopoulous, P., Stabile, M. Walld, R. and Roos, L. (2008). “Short-, Medium-, and Long-term Consequences of Poor Infant Health: An Analysis Using Siblings and Twins.” Journal of Human Resources 43(1), 88-138. Almond, D. (2006) “Is the 1918 Influenza Pandemic Over? Long-Term Effects of In Utero Influenze Exposure in the Post-1940 U.S. Population.” Journal of Political Economy, 114(4) 672-712. Third Factor Story Fuchs, Victor R. “Time Preference and Health: An Exploratory Study.” In Economic Aspects of Health, edited by Victor R. Fuchs. Chicago: University of Chicago Press, 1982. (Available from www.nber.org/chapters/c6546) Berger, Mark C., and Leigh, J. Paul. (1989) “Schooling, Self-Selection, and Health.” Journal of Human Resources, 24(3), 433-455. HEALTH AND INCOME Cutler, David M., Adriana Lleras-Muney Tom Vogl (2008) “Socioeconomic Status And Health: Dimensions And Mechanisms” NBER WP #14333 http://www.nber.org/papers/w14333. Smith, J.P. (1999). “Healthy Bodies and Thick Wallets: The Dual Relationship Between Health and Economic Status.” Journal of Economic Perspectives, 13(2), 145-166. Anne Case, Darren Lubotsky and Chris Paxson. (2002). “Economic Status and Health in Childhood: The Origins of the Gradient.” American Economic Review 92(5), 1308-1334. Currie, J and M. Stabile. (2003). “Socioeconomic Status and Child Health: Why is the Relationship Stronger for Older Children?” American Economic Review, 93(5) 1813-1823. Ruhm, Christopher. (2000). “Are Recessions Good for Your Health?”. Quarterly Journal of Economics. 115(2), 617-650. Evans, William N. and Timothy J Moore. (2009) “Liquidity, Activity, Mortality”. NBER Working Paper 15310.

LABOR MARKETS AND HEALTH Ruhm, C. “Parental Employment and Child Cognitive Development.” The Journal of Human Resources, Vol. 39, No. 1 (Winter, 2004), pp. 155-192.

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Anderson, P, KF Butcher, and PB Levine. “Maternal Employment and Overweight Children.” Journal of Health Economics 22 (2003) 477–504. Cawley, J. “The impact of obesity on wages.” The Journal of Human Resources, Vol. 39, No. 2 (Spring, 2004), pp. 451-474. Maddrian, B. “Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job Lock?” Quarterly Journal of Economics. February 1994, 27-54.

INSURANCE AND HEALTH OUTCOMES Manning, W., J. Newhouse, N. Duan, E. Keeler, A. Leibowitz and M. Marquis. (1987). “Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment.” American Economic Review, 77(3), 251-77. Finkelstein, Amy, Sarah Taubman, et al. (2012) “The Oregon Health Insurance Experiment: Evidence from the First Year”, Quarterly Journal of Economics 127 (3): 1057-1106. Levy, Helen and David Meltzer. “The Impact of Health Insurance on Health”. Annu. Rev. Public Health 2008. 29:399–409. http://www.annualreviews.org/doi/pdf/10.1146/annurev.publhealth.28.021406.144042 Currie, JM and J. Gruber. “Health Insurance Eligibility, Utilization of Medical Care and Child Health.” Quarterly Journal of Economics, 1996, 111(2) 431-466. Doyle, J. “Health Insurance, Treatment, and Outcomes: Using Auto Accidents as Health Shocks.” The Review of Economics and Statistics, vol. 87, no. 2, 2005, pp. 256–270. Gruber J. “State-mandated benefits and employer-provided health insurance.” J Public Econ 1994; 55: 433-464. Klick J. and S. Markowitz “Are Mental Health Insurance Mandates Effective?: Evidence from Suicides.” Health Economics, 15:1 (January 2006) 83-97. Lang, M. (2013) “The Impact of Mental Health Insurance Laws on State Suicide Rates.” Health Economics. 22:73-88

UNHEALTHY BEHAVIORS: ECONOMICS OF SUBSTANCE USE AND ABUSE Overview Articles Grossman, Michael. “Individual Behaviors and Substance Use: The Role of Price.” National Bureau of Economic Research Working Paper No. 10948, December 2004. A shorter version of this paper is published in Lindgren, Björn, and Grossman, Michael, editors. Substance Use: Individual Behavior, Social Interaction, Markets and Politics. Volume 16 of Advances in Health Economics and Health Services Research. Amsterdam: JAI, an imprint of Elsevier Ltd., 2005. Chaloupka, Frank J., and Warner, Kenneth E. “The Economics of Smoking.” Chapter 29 in Handbook of Health Economics. Cook, Philip J., and Moore, Michael J. “Alcohol.” Chapter 30 in Handbook of Health Economics

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Alcohol Cook P. and G. Tauchen, (1982). “The effect of liquor taxes on heavy drinking.” Bell Journal of Economics (available from JSTOR, now the Rand Journal of Economics), 13(2), 379-390. Manning, W.G., Blumberg, L., and L.H. Moulton (1995) “The Demand for Alcohol: The Differential Response to Price,” Journal of Health Economics, 14, 123-148. Kenkel, Donald S. “New Estimates of the Optimal Tax on Alcohol.” Economic Inquiry, April 1996, v. 34, iss. 2, pp. 296-319. Cook, P. Paying the Tab: The Costs and Benefits of Alcohol Control. Princeton, NJ: Princeton University Press, 2007. Read Chapter 8, “The Drinker’s Bonus”. Dills, AK.; M. Jacobson, and JA Miron. “The Effect of Alcohol Prohibition on Alcohol Consumption: Evidence from Drunkenness Arrests.” Economics Letters. 86(2), 279-284. Dee, Thomas. (1999). “State Alcohol Policies, Teen Drinking, and Traffic Fatalities.” Journal of Public Economics, 72(2). 289-315. Young, Douglas J.; Bielinska-Kwapisz, Agnieszka; “Alcohol Prices, Consumption, and Traffic Fatalities” Southern Economic Journal, January 2006, v. 72, iss. 3, pp. 690-703 Smoking Carpenter and Cook (2008) “Cigarette Taxes and Youth Smoking: New Evidence From National, State, & Local Youth Risk Behavior Surveys,” Journal of Health Economics Adda, Jerome and Francesca Cornaglia. (2006). Taxes, Cigarette Consumption, and Smoking Intensity. American Economic Review, 96(4) 1013-1028. Tauras, J.A., (2006). “Smoke Free Air Laws, Cigarette Prices, and Adult Cigarette Demand,” Economic Inquiry, 44(2), 333-342. Tauras, J.A, S. Markowitz and J. Cawley (2005). “Tobacco Control Policies and Youth Smoking: Estimates From a New Era.” in Advances in Health Economics and Health Services Research, Vol. 16-Substance Use: Individual Behavior, Social Interactions, Markets and Politics, edited by Bjorn Lindgren and Michael Grossman, Elsevier, Oxford, England, 2005. Markowitz, S. (2008). “The Effectiveness of Cigarette Regulations in Reducing Cases of Sudden Infant Death Syndrome.” Journal of Health Economics, 27:1, 106-133. WG Manning, EB Keeler, JP Newhouse, EM Sloss, J Wasserman. (1989) “The taxes of sin. Do smokers and drinkers pay their way?” JAMA 261(11):1604-1609. Illegal Drugs Pacula, RL; M Grossman, FJ Chaloupka, PM O’Malley, LD Johnston, and MC Farrelly (2001). “Marijuana and Youth” in Risky Behavior Among Youth, An Economic Analysis. J. Gruber (editor). The University of Chicago Press: Chicago, p 271-321.

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Desimone, Jeff, and Matthew C. Farrelly “Price And Enforcement Effects On Cocaine And Marijuana Demand.” Economic Inquiry, 41(1) January 2003, 98-115. Damrongplasit, K. and C. Hsiao. “Decriminalization Policy And Marijuana Smoking Prevalence: A Look At The Literature.” The Singapore Economic Review, Vol. 54, No. 4 (2009) 621–644 Anderson, D. Mark, Benjamin Hansen, and Daniel I. Rees. “Medical Marijuana Laws, Traffic Fatalities, and Alcohol Consumption.” Journal of Law and Economics. Vol. 56, No. 2 (May 2013), pp. 333-369. Miron, Jeffrey A. “The Effect Of Drug Prohibition On Drug Prices: Evidence From The Markets For Cocaine And Heroin”. The Review of Economics and Statistics, Aug. 2003, 85(3):522-530. Addiction Becker, Gary S.; Grossman, Michael; and Murphy, Kevin M. (1994) “An Empirical Analysis of Cigarette Addiction.” American Economic Review, 84(3) 396-418. Gruber, Jonathan, and Koszegi, Boton. (2001). “Is Addiction ‘Rational’? Theory and Evidence.” Quarterly Journal of Economics, 116(4), 1261-1303. Grossman, Michael; Chaloupka, Frank J.; and Sirtalan, Ismail. (1998) “An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels.” Economic Inquiry 36(1), 39-46. Grossman, Michael, and Chaloupka, Frank J. (1998) “The Demand for Cocaine by Young Adults: A Rational Addiction Approach.” Journal of Health Economics, 17(4), 427-474. Auld, M. Christopher; Grootendorst, Paul. (2004). “An Empirical Analysis of Milk Addiction” Journal of Health Economics, 23(6), 1117-33.

UNHEALTHY BEHAVIORS: ECONOMICS OF OBESITY Chou, Shin-Yi; Grossman, Michael; and Saffer, Henry. (2004). “An Economic Analysis of Adult Obesity: Results from the Behavioral Risk Factor Surveillance System.” Journal of Health Economics, 23(3), 565–587. Cawley John H. , Sara Markowitz and John Tauras. (2004) “Lighting Up and Slimming Down: The Effects of Body Weight and Cigarette Prices on Adolescent Smoking Initiation”. Journal of Health Economics, 23(2), 293-311. Cutler, David, Edward Glaeser and Jesse Shapiro. (2003) “Why Have Americans Become More Obese?” Journal of Economic Perspective,17(3), 93-118. Lakdawalla, D. T. Philipson, J. Bhattacharya. (2005). “Welfare Enhancing Technological Change and the Growth of Obesity,” American Economic Review: Papers and Proceedings, 95(2), 253-257.

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INSURANCE, MORAL HAZARD, AND ADVERSE SELECTION Rothschild, M. and J. Stiglitz. (1976). “Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information” Quarterly Journal of Economics, 90(4), 629-49. Zweifel, P. and W. Manning. (2000). “Moral Hazard and Consumer Incentives in Health Care” Handbook of Health Economics, 409-457 (particularly p. 429-453). (Provides a useful overview of issues.) Altman, D.; DM Cutler, RJ Zeckhauser. (1998). “Adverse Selection and Adverse Retention.” American Economic Review Papers and Proceedings. 88(2), 122-126. Pauly, M. (1968). “The Economics of Moral Hazard: Comment” American Economic Review, 58(3, part 1), 531-536. Cutler, D. and R. Zeckhauser. (2000). “The Anatomy of Health Insurance”, Handbook of Health Economics, 563-643. Nyman, John A. (1999). The Economics of Moral Hazard Revisited. Journal of Health Economics 18(6): 811-824.

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