Lecture 3

Question 1

Moral hazard with health insurance

Answer 1

Insured people take risks with their health that similar uniinsured pepole would not take, and demand more expensive treatment from their doctors when they get sick

Question 2

Ex ante moral hazard

Answer 2

behaviour changes that occur before an insured event happens and make that event more likely

Question 3

ex post moral hazard

Answer 3

behaviour changes that occur after an insured event happens and make recovering from that event more expensive

Question 4

Determining extent of price distortion

Answer 4

The vertical distance between Pu and Pi, helps determine the social loss from moral hazard
> The fuller the insurance, the greater the price distortion

Question 5

The extent of price sensitivity

Answer 5

The angle between the demand curve Dc and the vertical, the larger this angle is, the moer responsive behaviour is to price distortions and the larger the social loss from moral hazard.
> The extent of price sensitivity depends on the nature of the risk being insured and how controllable it is.

Question 6

The Preston Curve

Answer 6

Life Expectancy versus GDP per capita
Left bottom there is a short life expectancy with poor countries. Then it increases steeply to high life expectancy at low income levels. The curve flattens, rich countries show with high life expectancy and high income.

Question 7

Measures for SES

Answer 7

1. Education
2. Income
3. Wealth
4. Employment
5. Occupation

Question 8

Health based selection

Answer 8

Poor labour conditions > Poor health > reduces work
Around the age of 50 the health of people in the labour force increases > early retirement due to hard work? > Loss of income

Question 9

Reverse causation

Answer 9

A loss of work can cause poor health and a poor socio economic status

Question 10

3 roles of Health (H) in the grossman model

Answer 10

1. Health is a consumption good
2. An input into production
3. A form of stock/capital (an investment)

Question 11

Production Possiblitity Frontier (PPF)

Answer 11

The possible combinations of H and Z attainable, given an individual’s budget and time constraints.
Zie de figuur!!

Question 12

Marginal Efficiency of Capital (MEC) curve

Answer 12

Indicates how efficient each unit of health capital is in increasing lifetime utility
When the level of health is low, small investments have high returns to productive time

Question 13

Eighty-five percent of early deaths due to

Answer 13

Behaviour
Socioeconomic Status
Genetics
Remaining 15:
- environmental factors
- shortfaults in medical care

Question 14

Health Gradient

Answer 14

health disparities between socioeconomic groups are large
Accounted by:
- psychosocial working environment
- social circumstances outside work
- health behaviour

Question 15

Causes of preventable death

Answer 15

1. Tobacco
2. Poor diet and physical inactivity (obesity)
3. Alcohol consumption

Question 16

Education as a dimension of SES

Answer 16

Education has a causal protective effect on health and mortality

• education increases wages, enabling purchases of health investment goods and services
• education increases the efficiency of medical and preventive care
• educated are better at managing their diseases