Ch 2-5 Flashcards
Technical Efficiency
minimize the input required to produce a given output, any point on the ppf
Cost minimizing efficiently
minimize the cost of producing a technically efficient output
Allocative efficiency
when resources are produces and allocated in line with the value consumers place on them, must be technically and cost efficient
Pareto improvement
if the gains to the winner are larger enough that the winners could compensate the losers and still be better off
Horizontal Equity
equal people being treated equally
Vertical Equity
Unequal people being treated unequally
Net benefit equation
= (Benefit A - Benefit B) - (Cost A - Cost B)
Value of a statistical life
Change in Income/ Change in risk
incremental cost effectiveness ratio
ICER= (C1- C0)/ (E1- E0)
Quality adjusted life years
QALYs= Quantity of life (Q) X Quality of life(q)
Incremental cost-utility analysis/ ratio
ICUR= (Cost A- Cost B)/ (QALY A- QALY B)
3 challenges in conducting economic evaluation
Shadow pricing
Double counting
Aggregating cost and consequences
How does aging affect Quantity of health capital
Aging causes an increase in marginal cost decrease the total level of health capital demanded
How does education affect Quantity of health capital
Education increases productivity increased the marginal benefit of health capital
How does a wage increase affect Quantity of health capital
A wage increase, increases the return on healthy days therefore increasing the marginal benefit of health capital but will also increase the demand for heath care due to opportunity cost
