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Category Archives: I1

The Relationship between and Geographic Distribution of Breast Cancer Statistics: Diagnosis, Survival, and Mortality in Selected Areas in the United States, 1973-2004

By Timothy Rooney

Using breast cancer registry data from the United States and regression models controlling for race, marital status, and county-level variation, this research analyzes the connections between these statistics and the geographic variation of each of them. In doing so, it determines that stage of diagnosis has a significant impact on survival likelihood and the likelihood of death due to breast cancer. It also determines that survival reduces mortality likelihood. Additionally, it determines that stage of diagnosis, survival, and mortality all vary geographically, postulating that the reason for this variation is due to lifestyle variation and uneven medical talent distribution.

Honors Thesis

Advisor: Charles Becker, Michelle Connolly | JEL Codes: I1, I10, I19 | Tagged: Cancer, Diagnosis, Health, Mortality, Survival

Marijuana Pricing Structure and State-Level Price Determinants

By Rebecca Li

This study uses the PriceofWeed.com data set first examined in Thies (2012) to analyze the price-quantity relationship for marijuana transactions and to determine the effect of various state-level factors on marijuana prices. By applying the cost-based full fixed cost recovery pricing model developed by Britney, Kuzdrall, and Fartuch (1983), this paper finds support for an inverse price-quantity relationship for marijuana rather than a logarithmic or linear relationship. User-rated quality is robust and significant across all models, and price-quantity discount elasticity of -0.220 is observed empirically. An analysis of state-level legal, demand-side, and supply-side determinants of marijuana price demonstrates that medical marijuana has a negative relationship with price, perhaps due to the reduction in risk faced by suppliers when medical marijuana is legalized.

Honor’s Thesis

Data Set

Advisor: Michael Munger, Phil Cook | JEL Codes: D04, I18, K42 | Tagged: Marijuana, Price, Quality, Transaction Size

Trauma Center Eficacy: Certification Status and its Effect on Traffic Fatalities at Varying Radii

By Robert Van Dusen

The goal of the paper is to better inform policy makers on the optimal placement of trauma center facilities. Below, I examine the effect of Californian trauma centers vs. standard emergency departments on traffic fatalities for 2002 to 2008. Hospital addresses are geocoded and compared to the geographic coordinates of fatal car accidents provided through USDOT in order to create a dependent fatality density variable for every hospital at different radii. Demographic controls for different radii are constructed using ArcGIS
to serve as a model for traffic fatalities.

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Advisor: Frank Sloan, Kent Kimbrough | JEL Codes: I1, I10, I18 | Tagged: Healthcare,
Trauma, Trauma Center

Incentives and Characteristics that Explain Generic Prescribing Practices

By Rahul Nayak

This study uses the National Ambulatory Medical Care Survey (2006-2010) and Health Tracking Physician Survey (2008) to study the incentives and characteristics that explain physician generic prescribing habits. The findings can be characterized into four main categories: (1) financial/economic, (2) informational, (3) patient- dependent and (4) drug idiosyncratic effects. Physicians in practices owned by HMOs or practices that had at least one managed care contract are significantly more likely to prescribe generic medicines. Furthermore, physicians who have drug industry influence are less likely to prescribe generic medicines. This study also finds consistent evidence that generic prescribing is reduced for patients with pri- vate insurance compared to self-pay patients. Drug-specific characteristics play an important role for whether a drug is prescribed as a generic or brand-name – in- cluding not only market characteristics, such as monopoly duration length, public familiarity with the generic and the quality of the generic, but also non-clinical drug characteristics, such as the length of the generic name compared the length of the brand-name. In particular, the public’s familiarity with the generic has a large effect on the generic prescribing rate for a given drug. There are few differences between the generic prescribing habits of primary care physicians and specialists after controlling for the drugs prescribed.

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Advisor: Frank Sloan | JEL Codes: D82, D83, I11, I13, I18 | Tagged: Drug Market Charac- teristics, Efficient Prescribing, Electronic Prescribing, Generic Prescribing, HTPS, Industry Influence, NAMCS, Patient Preferences, Physician Incentives, Principle- Agent Problem

Price Discrimination and Bargaining Power in the Global Vaccine Market

By Linda Li

Since the 1980’s, the market structure of vaccines has become increasingly oligopolistic, and in some cases monopolistic. Alongside these supply trends, we see the emergence and growth of group procurement schemes on the demand side of the market. National government and international organization procure vaccines on behalf of end users. Two such organizations include the UNICEF Supply Division and the PAHO EPI Revolving Fund, for which participation is based on income or geography. Consistent with one of the main goals of group procurement, these groups obtain price discounts on vaccines relative to the private sector. This paper seeks to disentangle two possible explanations for this observed price dispersion using vaccine price data over the years 2002-2012 from UNICEF, PAHO, and the U.S. The two explanations are that of price discrimination and bargaining power. Using proxy variables in a fixed effects model, I find that price discrimination does have a significant impact on price discount. I also find support for a bargaining power effect, however with less certainty, and the existence of supply constraints. These findings have important policy implications for national governments, as well as procurement groups.

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Advisor: David Ridley | JEL Codes: I11, I18, L22 | Tagged: Bargaining Power, Group Procurement, Price Discrimination, Vaaccines

Foreign Aid Allocation and Impact: A Sub-National Analysis of Malawi

By Rajlakshmi De

Understanding the role of foreign aid in poverty alleviation is one of the central inquiries for development economics. To augment past cross-country studies and randomized evaluations, this project data from Malawi is used in combination with multiple rounds of living standards data to predict the allocation and impact of health aid, water aid, and education aid.  Both instrumentation and propensity score matching methods are used.

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Advisor: Kent Kimbrough, Lori Leachman | JEL Codes: F35, I15, I25, I32, O12 | Tagged: Development, Education, Foreign Aid, Health, Malawi, Water

Debunking the Cost-Shifting Myth: An Analysis of Dnamic Price Discrimination in California Hospitals

By Omar Nazzal

Cost-shifting, a dynamic form of price discrimination, is a phenomenon in which hospitals shift the burden of decreases in government-sponsored healthcare reimbursement rates to private health insurers. In this paper, I construct a data set spanning 2007 – 2011 that matches financial metrics of California hospitals to hospital- and market-specific characteristics with theoretical implications in price discrimination. The subsequent analysis is split into three stages. In the first and second stages, I use a fixed-effects OLS model to derive a point estimate of the inverse correlation between private revenue and government revenue that is consistent with recent empirical work in cost-shifting, a body of literature almost entirely reliant upon fixed-effects and difference-in-difference OLS. These types of models are encumbered by the inherent causality loop connecting public and private payment sources. I address this endogeneity problem in the third stage by specifying a fixed-effects 2SLS model based on an instrument for government revenue constructed with data from the California Department of Health Care Services and the U.S. Census. This instrument performed well in canonical tests for relevance and validity. I find that an increase in government payments causes an increase in private payments, and that the relationship is statistically-significant at all reasonable levels. In addition, I comment on properties of the data set that suggest that the original inverse correlation was due to inadequate measurements of market power. I conclude with policy implications and suggestions for future research.

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Advisor: Frank Sloan | JEL Codes: I11, I13, I18, L11, L80 | Tagged: Health Insurance, Market Structure, Medicaid, Medicare, Price Discrimination

Policy in Competitive Insurance Markets: Incentivizing Risk Sharing and Cost Efficiency

By Ross Green

In the setting of a population with heterogeneous risk of illness, informational asymmetries in a competitive health insurance market can cause the gains from risk sharing to fall short of social optimality in equilibrium. Traditional policies meant to address the under-provision of insurance, like mandating open enrollment or community-rated premiums, can be prohibitively costly or impossible to implement. I consider three policy regimes in the context of a competitive insurance industry in which firms maximize profits by exerting effort to monitor the provision of health care. When multiple risk types are present in the population, I find that a subsidy rule based on the marginal costs of insuring high risks can induce a Pareto-improvement to risk sharing gains, at a cost to the efficiency of health care provision. The novelty of the subsidy rule lies in the way it incentives pooling equilibria.

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Advisor: Curtis Taylor | JEL Codes: I0, I13, I18 | Tagged: Health Care Efficiency, Insurance Contracts, Private Information

Integrating Medicare and Medicaid Healthcare Delivery and Reimbursement Policies for Dual Eligible Beneficiaries: A Cost-Efficiency Analysis of Managed Care

By Kan Zhang

The extreme underpricing of Chinese Initial Public Offerings in the early days of the Chinese equity markets was reduced by several reforms instituted by the Chinese government from around 2000 to 2002. These reforms reduced 1-day returns on IPOs from 295% to 72%. The reforms reduced IPO underpricing by decreasing the inequality between IPO supply and demand. These reforms, while announced between 2000 and 2002, likely took until around 2004 to take full effect. In addition to inequality between supply and demand, other factors such as information asymmetry and government/quality signaling contributed to underpricing both before and after the reforms.

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Advisor: Frank Sloan | JEL Codes: D61, I0, I11, I12, I18 | Tagged: Dual Eligibles, Managed Care, Medicare

Health Care Utilization and Health Status of NCMS Elderly Enrollees in China: Evidence from CHARLS Data

By Pengpeng Wang

This study explores the effect of benefit designs and demographic factors on health care utilization and health status of elderly rural enrollees in the New Cooperative Medical Scheme, a rural health insurance program implemented by the Chinese government in 2003. Using the new data from CHARLS pilot study, we find that immediate reimbursement does not have a statistically significant effect on health utilization as suggested in a previous study, but instead on health status. Other policy-related factors neither have a significant effect due to limited data and large standard deviation nor display a consistent effect.

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Advisor: Frank Sloan | JEL Codes: I13, I18 | Tagged: Health Care Utilization, Health Insurance, Health Status, New Cooperative Medical Scheme, Reimbusement Method, Rural China

Questions?

Undergraduate Program Assistant
Jennifer Becker
dus_asst@econ.duke.edu

Director of the Honors Program
Michelle P. Connolly
michelle.connolly@duke.edu