A dynamic heterogeneous labour demand model for German manufacturing

There is currently general agreement amongst economists that the discount rate to compute the present value of benefits and costs in the economic evaluation of public policies is defined according to the social time preference approach. However, whether this rate has to be used for the discount of non-monetary health consequences is a question for which there is no satisfactory reply. In this paper, it is argued that such a reply rests on the estimation of the relationship between the individual time preference for health and money in the contexts of private and social choice. In support of this argument an empirical analysis has been carried out in which the individuals making-up a representative sample of the population of Zaragoza (Spain) have been faced with a series of hypothetical inter-temporal choices. Their replies have implicitly revealed their temporal preference rates and have led to the conclusion that health consequences are discounted at a higher rate than monetary consequences. This would appear to be contrary to the standard practice applied in the economic valuation of health programmes.     

TALL TREES, PEOPLE, AND POLITICS: THE OPPORTUNITY COSTS OF THE REDWOOD NATIONAL PARK

Because individuals in the marketplace directly face opportunity costs, they must balance marginal costs against marginal benefits. In contrast, in politics, the opportunity costs facing decision makers are diluted. Estimates of the social costs of various public programs are generally understated, while the estimates of social benefits are exaggerated
This paper places the establishment and expansion of the Redwood National Park within this framework and analyzes it as a public investment decision. It is shown that in the initial creation of the Redwood National Park in 1968, the costs of land acquisition and employment loss were underestimated, while the projections for gains in tourism were excessive. Despite the opposition of local landowners and residents, the Park was further expanded 10 years later in 1978. There was again a misstatement of costs and benefits and also the creation of an expensive new entitlement program to defuse the opposition of labor
The experience with the redwood National Park illustrates the results of the political process, which allows decision makers to internalize benefits and externalize costs. Emotion and rhetoric tend to displace a careful weighing of marginal costs and benefits     

Public Good Provision and Ancillary Benefits: The Case of Climate Agreements

Several studies found ancillary benefits of the provision of public goods to be of considerable size. If these additional private benefits were noticed, they would imply not only higher cooperative but also non-cooperative provision levels. However, beyond these largely undisputed important quantitative effects, there would be qualitative and strategic implications associated with ancillary benefits: public policy would no longer be a pure but an impure public good. In this paper, we investigate these implications in a setting of non-cooperative coalition formation in the context of climate change. In particular, we address the following question. Would ancillary benefits if they were taken in consideration increase participation in international climate agreements and raise the success of these treaties in welfare terms?     

Cost-utility analysis of the rehabilitation of patients with musculoskeletal problems

The objective of this study is to discuss the rehabilitation of patients in primary health care with problems in the musculoskeletal system from a socioeconomic perspective. A trial with coordinated rehabilitation in primary health care is compared with traditional rehabilitation. This trial, performed in Sweden in 1994, was a two-year prospective and comparative study of consecutively included patients with long-term illnesses due musculoskeletal problems (810 observations). A cost-utility analysis shows that the new rehabilitation program in primary health care is a cost-minimization program for society. There is no significant difference in the quality of life between the trial and control groups. The total cost is lower for rehabilitation in primary health care than for traditional rehabilitation (6 percent). The indirect costs are higher than the direct health care costs (60 percent), and payments from social insurance increased by 8 percent. The health economic results support rehabilitation in primary health care but also points out that this type of rehabilitation can be further improved.     

The fiscal consequences of public health investments in disease-modifying therapies for the treatment of multiple sclerosis in Sweden

Abstract

Background and aims: The economic consequences of multiple sclerosis (MS) are broader than those observed within the health system. The progressive nature suggests that people will not be able to live a normal productive life and will gradually require public benefits to maintain living standards. This study investigates the public economic impact of MS and how investments in disease-modifying therapies (DMTs) influence the lifetime costs to government attributed to changes in lifetime tax revenue and disability benefits based on improved health status linked to delayed disease progression.

Methods: Disease progression rates from previous MS Markov cohort models were applied to interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab using a public economic framework. The established relationship between expanded disability status scale and work-force participation, annual earnings, and disability rates for each DMT were applied. Subsequently, we assessed the effect of DMTs on discounted governmental costs consisting of health service costs, social insurance and disability costs, and changes in lifetime tax revenues.

Results: Fiscal benefits attributed to informal care and community services savings for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were SEK340,387, SEK486,837, SEK257,330, and SEK958,852 compared to placebo, respectively. Tax revenue gains linked to changes in lifetime productivity for interferon beta-1a, peginterferon beta-1a, dimethyl fumarate, and natalizumab were estimated to be SEK27,474, SEK39,659, SEK21,661, and SEK75,809, with combined fiscal benefits of cost savings and tax revenue increases of SEK410,039, SEK596,592, SEK326,939, and SEK1,208,023, respectively.

Conclusion: The analysis described here illustrates the broader public economic benefits for government attributed to changes in disease status. The lifetime social insurance transfer costs were highest in non-treated patients, and lower social insurance costs were demonstrated with DMTs. These findings suggest that focusing cost-effectiveness analysis only on health costs will likely underestimate the value of DMTs.     

Cervical cancer prevention in Morocco: a model-based cost-effectiveness analysis

Abstract

Objective: Cervical cancer is a huge public health issue in Morocco which represents the second most frequent and fatal cancer among women. Countries that have not yet introduced the HPV vaccine could benefit greatly, but before implementation it is necessary to perform country-specific economic assessments that include current screening practices.

Methods: A Markov model was developed to simulate the natural history of HPV and cervical cancer so as to calculate the long-term health benefits and costs of HPV vaccination and current screening by visual inspection with acetic acid (VIA). Starting from a previous transition probability matrix used for a model from Spain, the present model was calibrated to cervical cancer incidence from Morocco. Cost survey data was used to estimate the cost of screening and clinical procedures from the public healthcare perspective. Incremental cost-effectiveness ratios were calculated as 2018US$ per additional year of life saved (YLS) and both costs and health outcomes were discounted at 3%.

Results: The expected reduction in lifetime risk of cervical cancer for current screening would be 14% at a cost of US$551/YLS compared with no intervention, assuming VIA every 3 years in women aged 30–49 at 10% coverage. HPV vaccination of pre-adolescent girls at 70% coverage would reduce the lifetime risk of cervical cancer by 62% at a cost of US$1,150/YLS, compared with no intervention. When implementing HPV vaccination in combination with current screening, vaccination would be dominated, and the combined strategy would provide a 69% reduction at a cost of US$2,843/YLS, compared with screening alone. Current screening would be dominated by vaccination when screening coverage is higher than 15%, whereas the combined strategy rapidly exceeds US$4,000/YLS.

Conclusions: HPV vaccination could be highly effective and cost-effective in Morocco. Current screening would be good value for money compared with no intervention, but scaling-up screening coverage would make it inefficient compared with vaccination.     

Does a voluntary conservation program result in a representative protected area network?: The case of Finnish privately owned forests

Conservation contracting has attained growing interest worldwide as a tool for protecting biodiversity in privately owned lands. In this policy, landowners receive payments from an environmental agency in exchange for land use practices that contribute to the supply of biodiversity. This approach may result in a conservation network which does not cover all focal ecological characteristics, because landowners determine the supply of potential targets. In addition, the contracts are typically allocated by using a scoring method that is not giving information on the representativeness of the species composition of the sites. In this study, we investigated what is the performance of a voluntary conservation program in selecting sites that would maximize the number of specific target species in the selected conservation network subject to a given budget constraint. We focused on the Finnish pilot program named Trading in Natural Values (TNV). Our data consisted of 56 mature stands covering both stands that were offered to the TNV program and stands that were not offered. All the stands were surveyed for specific groups of wood-inhabiting fungi and epiphytic lichens that can be considered as good surrogates for forest species diversity.Our results showed that the participation in the TNV program was large enough to meet the ecological goals, because the offered targets uncovered only two of the 73 surveyed species, and the cost-effective conservation network included only a few targets that were not offered in the pilot program. However, the contract allocation method used in the TNV could be improved, because many ecologically valuable targets that were offered to the program were not accepted. In general, it could be justified to survey some indicator species, which would be relatively easy to identify, to maximize species coverage in contract allocation. Surveying indicator species causes some extra costs, but these are likely to be minor compared with the costs savings in opportunity costs, due to the improved targeting of protected areas.     

Estimating the public economic consequences of introducing varenicline smoking cessation therapy in South Korea using a fiscal analytic framework

Background and aims: Smoking gives rise to many cross-sectorial public costs and benefits for government. Costs arise from increased healthcare spending and work-related social benefits, while smoking itself provides significant revenue for government from tobacco taxes. To better understand the public economic impact of smoking and smoking cessation therapies, this study developed a government perspective framework for assessing smoking-attributable morbidity and mortality and associated public costs. This framework includes changes in lifetime tax revenue and health costs, as well as changes in tobacco tax revenue, from fewer smokers.

Methods: A modified generational accounting framework was developed to assess relationships between smoking-attributable morbidity and mortality and public economic consequences of smoking, including lifetime tax revenue gains/losses, government social transfers, and health spending. Based on the current prevalence of smoking in South Korean males, a cohort model was developed for smokers, former-smokers, and never-smokers. The model simulated the lifetime discounted fiscal transfers for different age cohorts in 5 year age bands, and the return on investment (ROI) from smoking cessation therapy.

Results: Former smokers are estimated to generate higher lifetime earnings and direct tax revenues and lower lifetime healthcare costs due to the reduction of smoking-attributable mortality and morbidity compared to smokers, even after accounting for reduced tobacco taxes paid. Based on the costs of public investments in varenicline, this study estimated a ROI from 1.4–1.7, depending on treatment age, with higher ROI in younger cohorts, with an average ROI of 1.6 for those aged less than 65.

Conclusions: This analysis suggests that reductions in smoking can generate positive public economic benefits for government, even after accounting for lost tobacco tax revenues. The results described here are likely applicable to countries having similar underlying smoking prevalence, comparable taxation rates, and social benefit protection provided to individuals with smoking-related conditions.     

Saving the public from the private? Incentives and outcomes in dual practice

We consider a monopoly physician offering free public treatment and, if allowed, a private treatment for which patients have to pay out of pocket. While patients differ in the propensity to benefit from private treatment it always yields better health outcomes than public treatment but is also more costly in terms of money and time. We study the physician's supply of private care and allocation of time costs across public and private patients and contrast these with the first‐best allocation. To increase the willingness‐to‐pay for private treatment the physician shifts time costs to public patients. While this turns out to be socially optimal, the resulting positive network effect leads to an over‐provision of private care if time costs are sufficiently high. A second‐best allocation arises when the health authority sets public reimbursement but has no control over private provision. Depending on the welfare weight the health authority attaches to physician profits, a ban of dual practice may improve on the second‐best allocation. Notably, a ban benefits not only public patients but also private patients with a moderate propensity to benefit from private care.     

BENEFITS AND COSTS OF INTENSIVE FOSTER CARE SERVICES: THE CASEY FAMILY PROGRAMS COMPARED TO STATE SERVICES

The foster care system attempts to prepare children and youth who have suffered child maltreatment for successful adult lives. This study documents the economic advantages of a privately funded foster care program that provided longer term, more intensive, and more expensive services compared to public programs. The study found significant differences in major adult educational, health, and social outcomes between children placed in the private program and those placed in public programs operated by Oregon and Washington. For the outcomes for which we could find financial data, the estimated present value of the enhanced foster care services exceeded their extra costs. Generalizing to the roughly 100,000 adolescents age 12-17 entering foster care each year, if all of them were to receive the private model of services, the savings for a single cohort of these children could be about $6.3 billion in 2007 dollars. ( JEL D61, H75)     

THE WELFARE EFFECTS OF MANDATORY REEMPLOYMENT PROGRAMS: COMBINING A STRUCTURAL MODEL AND EXPERIMENTAL DATA

This article estimates a model of job search with utility costs and benefits triggered by mandatory reemployment programs. I use data from an experiment that generates exogenous variation in the threat of program participation and an increase in the job finding rate. I calculate the impact of the experiment on worker welfare, and find that participants would be willing to give up 1.5–1.7 weeks of unemployment benefits to avoid participation. These welfare costs vary across workers and are larger for workers with weaker employment prospects. Overall, welfare costs are substantial and therefore important to take into account.     

PUBLIC–PRIVATE PARTNERSHIP TO DEVELOP TECHNOLOGY INFRASTRUCTURE: A CASE STUDY OF THE ECONOMIC RETURNS OF DNA DIAGNOSTICS

This paper presents a quantitative case analysis of one US Advanced Technology Program (ATP) public–private partnership that advanced the technology infrastructure of molecular diagnostics, resulting in substantial downstream economic and public health benefits. Biotechnology R&D is generally characterized by technologies requiring substantial investments in time, money, and effort to develop and sustain concepts through long incubation times. Public sponsorship of a partnership between two companies who would have not otherwise collaborated, Affymetrix and Molecular Dynamics, accelerated the development of DNA microarrays and DNA sequencing technologies and induced innovation at competitor firms. Public sponsorship of private-company research accelerated the completion of the Human Genome Project and improved both the quality and rapidity with which the biotechnology industry and medical science acquire genetic information. Counterfactual scenarios were used to quantify net public benefits by estimating the hypothetical costs of achieving the same outcomes as using the processes and technologies the ATP-cofunded innovations superseded.     

COSTS AND BENEFITS OF REDUCING AIR POLLUTANTS RELATED TO ACID RAIN

The 1990 Clean Air Act Amendments initiated a dramatic reduction in emissions of sulfur dioxide and nitrogen oxides by electric power plants. This paper presents the results of an integrated assessment of the benefits and costs of the program. Dramatic uncertainties characterize the estimates especially with respect to the benefits of the program, many of which were modeled explicitly. The lion's share of benefits results from reduced risk of premature mortality, especially through reduced exposure to sulfates, and these expected benefits measure several times the expected costs of the program. Significant benefits also are estimated for improvements in health morbidity, recreational visibility, and residential visibility, each of which measures approximately equal to costs. Areas that were the focus of attention in the 1980s—including effects to soils, forests, and aquatic systems—still have not been modeled comprehensively, but evidence suggests that benefits in these areas are relatively small, at least with respect to "use values" for the environmental assets that are affected.     

The welfare implications of increasing disability insurance benefit generosity

In order to evaluate whether workers are over- or under-insured through the Disability Insurance (DI) program, we develop a framework that allows us to simulate the benefits as well as the costs associated with marginal changes in payment generosity from a representative cross-sectional sample of the population. Under the assumption that individuals are reasonably risk averse, we find that the typical worker would value increased benefits somewhat above the average costs of providing them. However, whether the benefit increases tend to lower or raise utility when we average across all individuals in our sample is sensitive to assumptions that affect the relative marginal utility of income to disabled individuals.     

The benefits and costs of public housing in New York City

Public housing has been the largest program of housing subsidies to low-income families in the United States for fifty years. This is a comprehensive study of its benefits and costs. It contains the first estimates of the extent to which the program provides its participants with greater effective incomes than the poorest ineligible families and the first detailed analysis of the distribution of benefits among all eligible households. It provides significantly better estimates of the effect of the program on consumption patterns of participants, the effect of replacing public housing with cash grants, and the efficiency with which housing services are produced. Finally, it adds to few reliable estimates of the distribution of benefits among participants.     

Changing health care, one phone call at a time

Demand management is an approach to providing health care benefits that is designed to help beneficiaries receive the appropriate level of care at the appropriate time. When this is accomplished, health care expenditures are reduced. This case study shows how a large union health plan implemented a demand management program that has been well received by its members and has been effective in helping to control plan costs.     

PROPERTY RIGHTS, REGULATORY TAKING, AND COMPENSATION: IMPLICATIONS FOR ENVIRONMENTAL PROTECTION

The 104th Congress considered several proposals requiring compensation for regulatory actions that diminish property values. Aimed primarily at weakening environmental protection, the bills focus on property rights independent of the public benefits from regulation. By significantly broadening the constitutional standard for compensation, the bills generate a government liability well in excess of compliance costs and thus discourage regulatory agencies from carrying out their mandates. The bills would increase transactions costs and undermine the efficient provision of environmental quality, public safety, and other public goods.     

Evaluate and communicate health care benefits

Both employers and employees need appropriate information to make intelligent decisions about health care benefits. For employers, analysis of health care data offers an approach to monitoring quality care and can provide a tool for controlling costs. For employees, an education and communication strategy is probably the single most important factor influencing both program utilization and employee acceptance.     

Behavioral health benefits: key to a healthy workforce

Mental disorders exact a heavier toll on workplace productivity than do physical illnesses, but a complete behavioral health program is often looked upon as just one more driver of rate increases. Properly understood, promoted and utilized, however, behavioral health benefits can contribute to decreased absenteeism and increased productivity, and even help offset the treatment costs of medical disorders.