SYLLABUS: Revised November 21

[http://cameron.econ.ucdavis.edu/e132/e132syl.html]

Department of Economics, University of California - Davis

FALL 2016

Professor Colin Cameron, 1124 Social Sciences and Humanities

Email: accameron@ucdavis.edu Website: http://www.econ.ucdavis.edu/faculty/cameron

**Meeting: **Tues Thurs 12.10 - 1.30 pm **MDSC
C 180 **Note: In Medical Sciences Building IC (a long
way from MU)

**Office Hours: **Tuesday
2.00-3.30 p.m.

Wednesday 2.00-3.30 p.m.

**Teaching Assistants:**

Chuan He chhe@ucdavis.edu
Office hours: SSH 0118 Thursday 10am-noon

Hang Zhou hanzhou @ucdavis.edu
Office hours: SSH 0138 Monday 5-6pm Tuesday 4-5pm

**Discussion Sections:
**Hang Zhou

Chuan He

The course goals are:

(1) Provide a detailed description of the institutional features of the health care market and current trends in this rapidly changing field;

(2) Demonstrate the use and usefulness of analyzing the health care market using economic analysis, particularly microeconomics, and some statistical/mathematical analysis.

Compared to other areas of economics, health economics is complicated by a lack of information (about what health services the consumer needs), great uncertainty (hence insurance) and payment through third-parties (insurance companies) rather than direct payment by the consumer.

(3) Analyze health data using regression methods and the statistical program Stata.

**Pre-requisites:**

Economics 100 (intermediate microeconomics) or ARE
100A or consent of instructor.

Mathematics 16A-B: These are a
pre-requisite for Economics 100.

An upper division regression class such as Economics
102, Economics 140, ARE 106, Statistics 108 or consent of
instructor.

**STATA for regression:**

**Part of the course entails
analyzing health-related data using regression methods
with the statistical package STATA.
Most but not all students will have taken ECN 102 or its
equivalent.
The discussion sections are in university computer labs
and the first discussion section will be on getting
started in STATA.**

**Stata is installed in 93 Hutchison, 2020 Scilab and the
Virtual Lab (after 2020 SciLab closes - ****http://virtuallab.ucdavis.edu/)
If you choose to purchase Stata go to http://www.stata.com/order/new/edu/gradplans/student-pricing/
To get started in Stata see http://cameron.econ.ucdavis.edu/stata/stata.html
**

**Supplementary Material:**

**There is a coursepack with lecture notes and readings.
Additional supplementary material will be posted at
Smartsite.
**

**Textbook:****Recommended but not required **

Jay Bhattacharya, Timothy Hyde and Peter Tu: *Health
Economics*, First edition, Palgrave MacMillan, 2014.

Three copies of the textbook are on two-hour reserve in Shields
Library.

**This is the second time I have used this book.****
**

Some past exams and solutions are at
http://cameron.econ.ucdavis.edu/e132/e132.html

**COURSE OUTLINE: **

**A. **Introduction, Overview of U.S. Health
Market, getting started in Stata

Class 1.
Bhattacharya Chapter 1 + Supplemental
Notes.

**B. **Health Insurance in the U.S.: Facts,
definitions and Rand experiment

Classes 2-3. Bhattacharya Ch.18
+ Supplemental Notes.

**C. **Economics of Health Insurance:
Risk pooling, risk aversion, moral hazard

Classes 4-6. Bhattacharya Chs.7, 8, 9.11-9.12 + Supplemental Notes.

***** Class 7 Midterm Exam 1 *****

**C. **Economics of Health Insurance: moral
hazard, adverse selection, other countries

Class 8-9. Bhattacharya Chs.11 + Supplemental Notes.

**D****. **Economic Evaluation of Health
Services: cost-benefit and cost-effectiveness analysis

Classes 10-11. Bhattacharya Ch.14 + Supplemental
Notes.

**E. **Demand for Health Care: Grossman model

Classes 12. Bhattacharya Chs.2-3 + Supplemental Notes

**F****. **Suppliers: Physicians, Hospitals

Classes 13-14. Bhattacharya Chs. 5, 6 + Supplemental Notes.

F

Classes 15-16. Bhattacharya Ch. 12 + Supplemental Notes.

G.

Classes 17. Bhattacharya Ch. 20 + Supplemental Notes.

Class 19. Bhattacharya Ch. 15 + Supplemental Notes.

Not covered this year

Class 20. Review of Course

COURSE GRADING:

**Midterm Exam1:
22.5% Thursday October 13
**(1) Thurs

Midterm Exam2: 22.5% Thursday November 10

Assignments: 10% Due 12.10 p.m.

**Assignments** will be graded satisfactory (2%)
or unsatisfactory (0%). Full solutions will be distributed.
Satisfactory means a serious attempt to answer at least 80% of
the questions. The lowest of the scores on the six assignments
is dropped, i.e. no penalty for not handing in one assignment if
the other five are graded satisfactory. No credit for late
assignments. Academic honesty is required - see below.

**Exams** are closed book with a mixture of
short answer (about two-thirds) and multiple choice (about
one-third) questions.

The final exam is comprehensive: about 60% on material up to the
second midterm and 40% on the remainder.

FOR
EXAMS YOU NEED TO BRING STUDENT PHOTO ID. I WILL DECIDE
WHERE TO SEAT YOU.

**Scores **are posted at Smartsite. You have
one week from when work is first returned in class to raise any
questions about grading.

AFTER THE FINAL EXAM IS TAKEN NO CHANGES WILL BE MADE
FOR ANY REASON TO ANY SCORES RECORDED ON SMARTSITE.

**Course grade** is determined by the total
score, with weights given above. The assignments are graded on a
generous scale (satisfactory or unsatisfactory), so most
students will get full credit on the assignment portion.
Therefore for most students the course score is determined by
scores on the assignments and exams. To indicate your progress I
give a grade on each midterm. But the final grade is determined
by summing the exam and assignment scores (and not by averaging
the grades).

I follow the department grading policy. For
upper division courses such as this the GPA is typically 2.7.