Demand for private health insurance: Is there a quality gap?

Quality of care is qualified as a main determinant of the demand forvoluntary private health insurance (PHI) in National Health Systems(NHS). This paper provides new evidence on the influence of the qualitygap between public and private health insurance and other demanddeterminants in the demand for PHI in Catalonia. The demand for PHI ismodelled as a demand for health care quality. Unlike previous studies, the database employed allows for the development of a link between thetheoretical and the empirical model dealing with unobserved heterogeneityand endogeneity issues. Results suggest that a rise in PHI qualityenhances an equivalent influence in the demand for PHI as an equalreduction of NHS quality. Income and price elasticity estimates areconsistent with the observed feature that PHI appears to be a luxurygood and individuals tend to be relatively insensible to tax relief'sand monetary co-payments in insurance contracts.

A multilevel analysis on the determinants of regional health care expenditure. A note

We apply a multilevel hierarchical model to explore whether anaggregation fallacy exists in estimating the income elasticity of healthexpenditure by ignoring the regional composition of national healthexpenditure figures. We use data for 110 regions in eight OECD countriesin 1997: Australia, Canada, France, Germany, Italy, Spain, Sweden andUnited Kingdom. In doing this we have tried to identify two sources ofrandom variation: within countries and between-countries. Our resultsshow that: 1- Variability between countries amounts to (SD) 0.5433, andjust 13% of that can be attributed to income elasticity and the remaining87% to autonomous health expenditure; 2- Within countries, variabilityamounts to (SD) 1.0249; and 3- The intra-class correlation is 0.5300. Weconclude that we have to take into account the degree of fiscaldecentralisation within countries in estimating income elasticity ofhealth expenditure. Two reasons lie behind this: a) where there isdecentralisation to the regions, policies aimed at emulating diversitytend to increase national health care expenditure; and b) without fiscaldecentralisation, central monitoring of finance tends to reduce regionaldiversity and therefore decrease national health expenditure.

Are agent-based simulations robust? The wholesale electricity trading case

Agent-based computational economics is becoming widely used in practice. This paperexplores the consistency of some of its standard techniques. We focus in particular on prevailingwholesale electricity trading simulation methods. We include different supply and demandrepresentations and propose the Experience-Weighted Attractions method to include severalbehavioural algorithms. We compare the results across assumptions and to economic theorypredictions. The match is good under best-response and reinforcement learning but not underfictitious play. The simulations perform well under flat and upward-slopping supply bidding,and also for plausible demand elasticity assumptions. Learning is influenced by the number ofbids per plant and the initial conditions. The overall conclusion is that agent-based simulationassumptions are far from innocuous. We link their performance to underlying features, andidentify those that are better suited to model wholesale electricity markets.

Education, growth and income inequality

Estimates of the e¤ect of education on GDP (the social return to education)have been hard to reconcile with micro evidence on the private return. We present a simple explanation that combines two ideas: imperfect substitution between worker types and endogenous skill biased technological progress. When types of workers are imperfect substitutes, the supply of human capital is negatively related to its return, and a higher education level compresses wage di¤erentials. We use cross-country panel data on income inequality to estimate the private return and GDP data to estimate the social return. The results show that the private return falls by 2 percentage points when the average education level increases by a year, which is consistent with Katz and Murphy's [1992] estimate of the elasticity of substitution between worker types. We find no evidence for dynamics in the private return, and certainly not for a reversal of the negative e¤ect as described in Acemoglu [2002]. The short run social return equals the private return.

Agglomeration-effects in Europe

The paper estimates agglomeration-effects for France, Germany, Italy, Spain, and the UK. Estimation takes into account endogeneity of the spatial distribution ofemployment and spatial fixed-effects. Empirical resultssuggest that agglomeration-effects in these Europeancountries are only slightly smaller than agglomeration-effects in the US: the estimated elasticity of average-labor-productivity with respect to employment-density is 4.5 percent compared to 5 percent in the US.

Openness, government size and the terms of trade

This paper investigates the relationship between trade openness and the size of government, both theoretically and empirically. We show that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation and (2) the demand for insurance, whereby trade raises risk and public transfers. We provide a unified framework for studying and testing these two mechanisms. First, we show how their relative strength depends on a key parameter, the elasticity of substitution between domestic and foreign goods. Second, while the terms of trade externality leads to inefficiently large governments, the increase in public spending due to the demand for insurance is optimal. We show that large volumes of trade may result in welfare losses if the terms of trade externality is strong enough while small volumes of trade are always beneficial. Third, we provide new evidence on the positive association between openness and the size of government and test whether it is consistent with the terms of trade externality or the demand for insurance. Our findings suggest that the positive relationship is remarkably robust and that the terms of trade externality may be the driving force behind it, thus raising warnings that globalization may have led to inefficiently large governments.

Endogenous labor market participation and the business cycle

Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show analytically how variations in the participation rate are driven by the cross-sectional density of home productivity near the participation threshold, andhow this density translates into an extensive-margin labor supply elasticity. A calibration of the model to macro data not only matches employment and participation variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches unemployment variations well. Furthermore, the labor supply elasticity implied by our calibration is consistent with microeconometric evidence for the US.

Killing by lung cancer or by diabetes? The trade-off between smoking and obesity

As the prevalence of smoking has decreased to below 20%, health practitioners interest has shifted towards theprevalence of obesity, and reducing it is one of the major health challenges in decades to come. In this paper westudy the impact that the final product of the anti-smoking campaign, that is, smokers quitting the habit, had onaverage weight in the population. To these ends, we use data from the Behavioral Risk Factors Surveillance System,a large series of independent representative cross-sectional surveys. We construct a synthetic panel that allows us tocontrol for unobserved heterogeneity and we exploit the exogenous changes in taxes and regulations to instrumentthe endogenous decision to give up the habit of smoking. Our estimates, are very close to estimates issued in the 90sby the US Department of Health, and indicate that a 10% decrease in the incidence of smoking leads to an averageweight increase of 2.2 to 3 pounds, depending on choice of specification. In addition, we find evidence that the effectovershoots in the short run, although a significant part remains even after two years. However, when we split thesample between men and women, we only find a significant effect for men. Finally, the implicit elasticity of quittingsmoking to the probability of becoming obese is calculated at 0.58. This implies that the net benefit from reducingthe incidence of smoking by 1% is positive even though the cost to society is $0.6 billions.

How important are tobacco prices in the propensity to start and quit smoking? An analysis of smoking histories from the Spanish National Health Survey

This paper analyses the effect of tobacco prices on the propensity tostart and quit smoking using a pool of the 1993, 1995 and 1997 editionsof the Spanish National Health Surveys. The estimates for severalparametric models of the hazard rate for starting and quitting suggestthat i) The public health measures applied as of 1992 have had asignificative effect on both reducing the hazard of starting andincreasing the hazard of quitting, ii) Prices have a very weak effect onthe hazard of starting in the male population and no significant effectin the female population, iii) The price floor of cigarrettes, proxiedby the average price of a pack of black cigarrettes, has a significanteffect on the quitting hazard which is robust across specifications andapplies to both men and women. The implied price elasticity of the timeup to quitting is situated around -1.4.

Stable sunspot equilibria in a cash-in-advance economy

We analyze a monetary model with flexible labor supply, cash-inadvance constraints and seigniorage-financed government deficits. If the intertemporal elasticity of substitution of labor is greater than one, there are two steady states, one determinate and the other indeterminate. If the elasticity is less than one, there is a unique steady state, which can be indeterminate. Only in the latter case do there exist sunspot equilibria that are stable under adaptive learning. A sufficient reduction in government purchases can in many cases eliminate the sunspot equilibria while raising consumption/labor taxes even enough to balance the budget may fail to achieve determinacy.

The evolution of inequity in the access to health care in Spain: 1987-2001

This paper reports an analysis of the evolution of equity in access to health care in Spain over the period 1987-2001, a time span covering the development of the modern Spanish National Health System. Our measures of access are the probabilities of visiting a doctor, using emergency services and being hospitalised. For these three measures we obtain indices of horizontal inequity from microeconometric models of utilization that exploit the individual information in the Spanish National Health Surveys of 1987 and 2001. We find that by 2001 the system has improved in the sense that differences in income no longer lead to different access given the same level of need. However, the tenure of private health insurance leads to differences in access given the same level of need, and its contribution to inequity has increased over time, both because insurance is more concentrated among the rich and because the elasticity of utilization for the three services has increased too.

Demand for pharmaceutical drugs: A choice modelling experiment

Despite the importance of supplier inducement and brand loyalty inthe drug purchasing process, little empirical evidence is to be foundwith regard to the influence that these factors exert on patients decisions. Under the new scenario of easier access to information,patients are becoming more demanding and even go as far asquestioning their physicians prescription. Furthermore, newregulation also encourages patients to adopt an active role in thedecision between brand-name and generic drugs. Using a statedpreference model based on a choice survey, I have found evidenceof how significant physicians prescription and pharmacists recommendation become throughout the drug purchase process and,to what extent, brand loyalty influences the final decision. Asfar as we are aware, this paper is the first to explicitlytake consumers preferences into account rather than focusingon the behavior of health professionals.

Markups, gaps and the welfare costs of business fluctuations

In this paper we present a simple theory-based measure of the variations in aggregate economic efficiency: the gap between the marginal product of labor and the household s consumption/leisure tradeoff. We show that this indicator corresponds to the inverse of the markup of price over social marginal cost, and give some evidence in support of this interpretation. We then show that, with some auxilliary assumptions our gap variable may be used to measure the efficiency costs of business fluctuations. We find that the latter costs are modest on average. However, to the extent the flexible price equilibrium is distorted,the gross efficiency losses from recessions and gains from booms may be large. Indeed, we find that the major recessions involved large efficiency losses. These results hold for reasonable parameterizations of the Frisch elasticity of labor supply, the coefficient of relative risk aversion, and steady state distortions.

The determinants of football match attendance revisited: Empirical evidence from the Spanish Football League

An attendance equation is estimated using data on individual games playedin the Spanish First Division Football League. The specification includesas explanatory factors: economic variables, quality, uncertainty andopportunity costs. We concentrate the analysis on some specificationissues such as controlling the effect of unobservables given the paneldata structure of the data set, the type of functional form and thepotential endogeneity of prices. We obtain the expected effects onattendance for all the variables. The estimated price elasticities aresmaller than one in absolute value as usually occurs in this literaturebut are sensitive to the specification issues.

Transportation choices and the value of statistical life

This paper exploits an unusual transportation setting to estimate the value of a statistical life(VSL). We estimate the trade-offs individuals are willing to make between mortality risk andcost as they travel to and from the international airport in Sierra Leone (which is separated fromthe capital Freetown by a body of water). Travelers choose from among multiple transportoptions ? namely, ferry, helicopter, hovercraft, and water taxi. The setting and original datasetallow us to address some typical omitted variable concerns in order to generate some of the firstrevealed preference VSL estimates from Africa. The data also allows us to compare VSLestimates for travelers from 56 countries, including 20 African and 36 non-African countries, allfacing the same choice situation. The average VSL estimate for African travelers in the sample isUS$577,000 compared to US$924,000 for non-Africans. Individual characteristics, particularlyjob earnings, can largely account for the difference between Africans and non-Africans; Africansin the sample typically earn somewhat less. There is little evidence that individual VSL estimatesare driven by a lack of information, predicted life expectancy, or cultural norms around risktakingor fatalism. The data implies an income elasticity of the VSL of 1.77. These revealedpreference VSL estimates from a developing country fill an important gap in the existingliterature, and can be used for a variety of public policy purposes, including in current debateswithin Sierra Leone regarding the desirability of constructing new transportation infrastructure.