Is the person trade-off a valid method for allocating health care resources? Some caveats

The Person Trade-Off (PTO) is a methodology aimed at measuring thesocial value of health states. The rest of methodologies would measure individualutility and would be less appropriate for taking resource allocation decisions.However few studies have been conducted to test the validity of the method.We present a pilot study with this objective. The study is based on theresult of interviews to 30 undergraduate students in Economics. We judgethe validity of PTO answers by their adequacy to three hypothesis of rationality.First, we show that, given certain rationality assumptions, PTO answersshould be predicted from answers to Standard Gamble questions. This firsthypothesis is not verified. The second hypothesis is that PTO answersshould not vary with different frames of equivalent PTO questions. Thissecond hypothesis is also not verified. Our third hypothesis is that PTOvalues should predict social preferences for allocating resources betweenpatients. This hypothesis is verified. The evidence on the validity of themethod is then conflicting.

Regulatory ambivalence and the limitations of pharmaceutical policy in Spain

Broadly speaking, pharmaceutical policy in Spain has been unable to control either the price or thevolume of drugs prescribed. Limited attempts have been made to bring together the regulation of thepharmaceutical market and policies, in pursuit of the desired goals of efficiency and quality. Thispaper assesses the regulation of the Spanish pharmaceutical market over the last two decades byexamining regulation and policy and the available empirical evidence on their appreciable effects,and presents recommendations for policy design. Our findings suggest that policies aiming to improveefficiency and quality have not managed to contain costs, while cost-effectiveness is still overlooked.We argue that future policies should encourage broader participation in the decision-making processesand promote a higher degree of competition, especially from generic drugs.

The dynamics of research networks in Brite-Euram

Network formation within the BRITE--EURAM program is investigated.Wedescribe the role of the hub of the network, which is defined as the setofmain contractors that account for most of the participations. We studytheeffects that the conflict of objectives within European research fundingbetween pre-competitive research vs. European cohesion has on theformationof networks and on the relationship between different partnersof the network. \\A panel data set is constructed including the second and third frameworkof theBrite--Euram program. A model of joint production of research results isusedto test for changes in the behavior of partners within the twoframeworks. \\The main findings are that participations are very concentrated, that isasmall group of institutions account for most of the participations, butgoingfrom the second to the third framework the presence of subcontractorsand singleparticipants increases substantially. This result is reinforced by the factthat main contractors receive smaller spill-ins within networks, butspill-insincrease from the second to the third framework.

Interbank liquidity crunch and the firm credit crunch: Evidence from the 2007-2009 crisis

We study the credit supply effects of the unexpected freeze of the Europeaninterbank market, using exhaustive Portuguese loan-level data. We find thatbanks that rely more on interbank borrowing before the crisis decrease theircredit supply more during the crisis. The credit supply reduction is stronger forfirms that are smaller, with weaker banking relationships. Small firms cannotcompensate the credit crunch with other sources of debt. Furthermore, theimpact of illiquidity on the credit crunch is stronger for less solvent banks.Finally, there are no overall positive effects of central bank liquidity, but higherhoarding of liquidity.

Compensating wage differentials and voluntary job changes: Evidence from West Germany

Does the labor market place wage premia on jobs that involve physical strain,job, insecurity or bad regulation of hours? This paper derives bounds on themonetary returns to these job disamenities in the West German labor market.We show that in a market with dispersion in both job characteristics andwages, the average wage change of workers who switch jobs voluntarily and optfor consuming more (less) disamenities,provides an upper (lower) bound on themarket return to the disamenity. Using longitudinal information from workersin the German Socio Economic Panel, we estimate an upper bound of 5% and alower bound of 3.5% for the market return to work strain in a job.

The impact of the reference price system on the pharmaceutical market: A theoretical approach

This article analyses the impact of the reference pricesystem on the price-setting strategies of thepharmaceutical firms and on the level of generic usage.This model is the first to take explicitly into accountthe impact of the reference price mechanism on the levelof competition between brand-name and generic drugs andnational pharmaceutical spending. We consider aduopolistic model with one firm producing the brand-namedrug, whose patent has already expired, and the otherproducing the corresponding generic version. We work ina partial equilibrium framework where firms set pricessequentially and consumers face heterogeneous switchingcosts.We show that brand producers compensate thedecline of profits by selling greater quantities insteadof charging higher prices, thus fostering pricecompetition in the pharmaceutical market. This result isa consequence of both the assumption of a verticallydifferentiated model and the introduction of thereference price system.

Does direct democracy reduce the size of government? New evidence from historical data, 1890-2000

Using historical data for all Swiss cantons from 1890 to 2000, we estimate the causal effect of direct democracy on government spending. The main innovation in this paper is that we use fixed effects to control for unobserved heterogeneity and instrumental variables to address the potential endogeneity of institutions. We find that the budget referendum and lower costs to launch a voter initiative are effective tools in reducing canton level spending. However, we find no evidence that the budget referendum results in more decentralized government or a larger local government. Our instrumental variable estimates suggest that a mandatory budget referendum reduces the size of canton spending between 13 and 19 percent. A 1 percent lower signature requirement for the initiative reduces canton spending by up to 2 percent.

Negativity effect and the emergence of ideologies

``Negativity effect'' refers to the psychological phenomenon that peopletend to attach greater weight to negative information than to equallyextreme and equally likely positive information in a variety of informationprocessing tasks. Numerous studies of impression formation have found thatnegative information is weighted more heavily than positive information asimpressions of others are formed. There is empirical evidence in politicalscience that shows the importance of the negativity effect in the informationprocessing of the voters. This effect can explain the observed decreaseof popularity for a president the longer he is in office. \\We construct a dynamic model of political competition, incorporating thenegativity effect in the decision rule of the voters and allowing their preferencesto change over time, according to the past performance of the candidateswhile in office. Our model may explain the emergence of ideologies out ofthe competition for votes of myopic candidates freely choosing policypositions. This result gives rise to the formation of political parties,as infinitely--lived agents with a certain ideology. Furthermore, in thismodel some voters may start out by switching among parties associated withdifferent policies, but find themselves supporting one of the parties fromsome point on. Thus, the model describes a process by which some votersbecome identified with a ``right'' or ``left'' bloc, while others ``swing''between the two parties.

The effect of unemployment spells on subsequent wages in Spain

In our analysis we try and recover the wage loss from unemploymentin Spain and see how it is affected by previous unemploymentexperience, unemployment duration, eligibility for unemploymentbenefits, and previous wages. We also study its variations acrossgroups. Our main conclusion is that while there is some evidencethat labour market rigidities tend to lower it, the wage loss ofdisplaced workers is remarkably high: more than 30%, that is,twice the equivalent figure for the US and France. Wages in Spainsuffer from a serious mismeasurement problems that we do our best tocontrol, so that our results are less robust than the ones thatwould be obtained with better data sets. However, they indicate a large level of wage flexibility in Spain.