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Health and Behaviour
This research programme connects the research themes of the Behavioral and the Health Economics groups of the Applied Economics Department of ESE. Overlap is natural because health is one of the main fields of application of the Behavioral group and the study of economic behavior with respect to health and health care is one of the central themes of the Health group.
Phase of development
This programme is well under way since several years. It started with the winning of a NWO VICI grant by Han Bleichrodt (2007), a NETSPAR grant by Eddy van Doorslaer (2007) and several NWO VENI fellowships (Tom van Ourti, Kirsten Rohde, Teresa Bago d’ Uva and Aurelien Baillon). It recently obtained additional external funding from the US NIA (2009) and fellowships from the EU Marie Curie programme (Pilar Garcia Gomez), AXA Foundation (Koc), and NWO open competition grants.
Strategy and policy
The themes are broadly structured around the large, externally funded research programmes. For the Health Economics (HE) Group, the current themes can be divided into research questions relating to (i) the economics of health and (ii) the economics of health care. Important themes under (i) include economic decisions affecting health with respect to labor force participation (e.g. whether health improvements enable us to postpone retirement), with respect to occupation (Can/should some workers retire earlier than others?) and life styles (Is overweight overtaking smoking as the main pathway between schooling and health?). In the absence of experimental evidence, quasi-experimental evaluation and treatment effect identification designs are often used to explore these questions. Research themes addressed under (ii) include the measurement, explanation and interaction between health and income inequality, the demand for medical and long term care, health measurement and bias correction, sustainable health insurance in low income settings and the effects of competition on efficiency of health care delivery.
Health Economics
The programme Economics of Health is focused on life cycle behavior explaining social disparities in health. It is structured around questions with respect to health and labor force participation decisions involving retirement and disability (Garcia Gomez, O’Donnell, Erdogan, Van Doorslaer, Gielen), the role of occupation in the effect of education on health (van Kippersluis, Ravesteijn, van Doorslaer, O’Donnell van Ourti), the role (un)healthy lifestyle in the relation between health and income or wealth (van Kippersluis, Webbink, van Ourti, Bago d’Uva). A second programme concerns the Economics of Health Care and addresses questions of equity and efficiency. It includes themes like demand for health care behavior (Bago d’Uva, Garcia Gomez, O’Donnell, van Doorslaer, Bakx), equity and inequality measurement and explanation (van Ourti, Erreygers, van Doorslaer, Bleichrodt, Rohde), as well as the effect of health insurance and self-insurance on health care access and financial protection in low income settings (O’Donnell, van de Poel, van Doorslaer, Bonfrer, Garcia Gomez, Flores).
Behavioral Economics
The research of the Behavioral Economics (BehEc) Group focuses on two broad themes: (1) decision under risk and uncertainty and (2) intertemporal choice. Theme (1) focuses primarily on prospect theory, currently the most important descriptive theory of decision under risk and uncertainty. BehEc has contributed much to the development of prospect theory, both by providing behavioral foundations and by providing new measurement tools to quantify the main parameters of prospect theory (Wakker, Baillon, Bleichrodt, Spinu, Kothiyal, van Dolder). One area in which these insights have been applied is the measurement of health. New methods have been designed to measure health based on prospect theory and subsequent research has shown that these new measures provided significantly more reliable results. (Bleichrodt, Wakker). Future research in this area will focus on the measurement and analysis of ambiguity. In real life many decisions are made in the absence of knowledge about the exact probabilities. This is particularly true for health decisions. A recent example is the swine flu epidemic. The absence of probabilistic information about the swine flu caused an overreaction and led governments to order an excessive amount of vaccines, many of which had to be destroyed afterwards. Insights in how people and governments overreact to the absence of probabilistic information will help to design more rational health policy.
In theme (2) we focus primarily on the measurement of hyperbolic discounting models (Rohde, Wakker, Bleichrodt). These models have become very popular in economics but little evidence exists which of these models fits the empirical data. BehEc has recently developed methods to measure the different models and we have proposed a new class of intertemporal models that, based on preliminary findings, provides the best fit. We have also developed a new method to measure discounting for health, which allows to measure the widely-used QALY model more reliably and more easily. Obtaining descriptively realistic models of intertemporal choice is crucial for government policy, given that the big decisions that face western society all involve trading-off benefits and costs over time. Examples are the financing of the pension system and dealing with global warming. The insights from this research will also be useful in the programme the Economics of Health. Existing life-cycle models assume that people discount at a constant rate but evidence abounds that they do not and violated constant discounting systematically. These violations imply have important implications for our understanding of health decisions. For example, they imply that people underestimate the future consequences of unhealthy behavior like smoking and overeating. They may also imply that people underinvest in education. Empirical research has also shown that the lower educated tend to deviate more from constant discounting than those with a higher education. This contributes to the finding that lower education is correlated with poorer health and is directly relevant for the research on disparities in health.
A relatively new area in which the BehEc group is active is the use of field studies (Rohde, Stoop). Previous work was primarily based on findings from the laboratory. An open question is to what extent these lab findings can be generalized to real-life decisions. Currently studies are undertaken (joint with researchers from the marketing and managerial economics programmes) to explore these questions. One study, performed in a gym, focuses on the question how people can be induced to exercise more, i.e. how healthy lifestyles can be promoted.
The research programme is connected to the ESE and TI teaching programmes in various ways. Project staff members organize, teach and coordinate (i) an ESE MSc Degree in Health Economics, (ii) a Major programme in Health Economics, (iii) Bachelor 2 and 3 courses in Behavioural Economics, (iv) aa master course in Experimental Economics, (v) an ERIM MPhil Course in Behavioral Decision Theory, (vi) TI core courses in Micro economics and (Behavioral) Game Theory, and (vii) TI MPhil Field courses in Prospect Theory and in Health Economics . A Master Programme in Behavioral Economics is currently being developed and is expected to start in September 2012. In addition, around 25 Bachelor and 35 Master dissertations are supervised each year. Taken together with the supervision of the 14 PhD students, this means that there is substantial spill-over of the research to the teaching.
Processes in research
The structuring around large externally funded programmes entails certain formats. Group members are involved in the organization of various types of regular meetings
- The NETSPAR project on “Health, income and labour across the life cycle”is executed jointly with Maarten Lindeboom and his team (VU, Amsterdam) and has its own series of events, including national and international conferences, pension days, etc.
- The joint NIA programme with RAND facilitates joint work (with e.g. Arie Kapteyn, Rand; Arthur van Soest, UvT; Andreas Lleras Muney, UCLA; Isaac Ehrlich, Chicago) and extended work visits (e.g. T Galama, H van Kippersluis).
- The HE group organizes the Tinbergen funded HE seminar series (in collaboration with BEHec and the Institute for Health Policy and Management).
- The BehEc group organizes an annual workshop on Decision under Uncertainty. The next workshop will be held in Israel and is organized jointly with Technion University, Haifa (Ido Erev).
- Owen O’Donnell is co-organizer of the Annual European Health Economics and Econometrics Workshop series (jointly with Andrew Jones, University of York, UK).
International collaboration. The HE group has a structural collaboration with Maarten Lindeboom (VU), Tom van Ourti has intensive collaboration with Erik Schokkaert (CORE, Louvain-la-Neuve), Guido Erreygers (Antwerp), Philip Clark (Sydney). Hans van Kippersluis collaborates with Titus Galama (RAND), Isaac Ehrlich (Chicago) and Adriana Lleras-Muney (UCLA). Teresa Bago d’ Uva works with Arthur van Soest (UvT) and Arie Kapteyn (RAND). Pilar Garcia Gomez participates in the NBER Internation Social Security Group and collaborates with Angel Lopez Nicolas (Carthagena). The BehEc group works closely together with the behavioral group at HEC Paris (Mohammed Abdellaoui, Olivier ‘Haridon, Corina Paraschiv). In addition, Peter Wakker has collaborated with many of the top scholars in economics (e.g. Nobel laureate Daniel Kahneman, Itzhak Gilboa, David Schmeidler). Han Bleichrodt collaborates closely with John Quiggin (University Queensland, Brisbane), Jose Luis Pinto (Sevilla), and Jason Doctor (USC, Los Angeles). Han Bleichrodt also holds a visiting professorship at USC. Kirsten Rohde collaborates intensively with Anke Gerber (Hamburg) and Drazen Prelec (MIT). Jan Stoop collaborates with John List (Chicago) and David Rand (Harvard).
Analysis, perspectives and expectations for the research programme
In view of its rapid expansion in the previous period, the programme currently does not aim at expanding the number of themes but rather aims at consolidating the strong position obtained. This implies securing continued external funding to either retain or attract the research talent required to achieve its ambitious goals. All professors and associate professors, and most of the assistant professors have gained Tinbergen Fellowship status on the basis of their research record. New NWO (VENI, VIDI) and EU (FP7, Marie Curie) and research grant proposals are under preparation.
