SYLLABUS: Revised November 21

Department of Economics, University of California - Davis
FALL 2016

Professor Colin Cameron,  1124 Social Sciences and Humanities
Email:  Website:

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         Office hours: SSH 0118 Thursday 10am-noon 
    Hang Zhou  hanzhou  Office hours: SSH 0138 Monday 5-6pm Tuesday 4-5pm

Discussion Sections:
ang Zhou    A01: Wednesday 7.10 - 8.00 pm  93 Hutchison
ang Zhou    A02: Wednesday 7.10 - 8.00 pm  93 Hutchison
Chuan He     A03: Wednesday 6.10 - 7.00 pm  2020 Scilab
Chuan He     A04: Wednesday 6.10 - 7.00 pm  2020 Scilab

Course Goals:
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.

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 -
If you choose to purchase Stata go to 
To get started in Stata see

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.
It has changed a bit the topics I teach and their order compared to 132 classes in 2014 and earlier.

Some past exams and solutions are at


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.

***** Class 15  Midterm Exam 2  *****

. Suppliers (continued): Pharmaceuticals
Classes 15-16. 
Bhattacharya Ch. 12 + Supplemental Notes.

's Role in Health Care
Classes 17.  Bhattacharya Ch. 20 + Supplemental Notes.

H. Medical Technology
Class 18. Bhattacharya Ch.13
+ Supplemental Notes.

International Comparisons

Class 19. Bhattacharya Ch. 15 + Supplemental Notes.

J. Obesity
Not covered this year

Class 20.  Review of Course


Midterm Exam1:   22.5%    Thursday October 13    
Midterm Exam2:   22.5%    Thursday November 10  
Assignments:           10%       Due 12.10 p.m. 
(1) Thurs Sept 29, (2) Tues Oct 11, (3) Thurs Oct 27, (4) Tues Nov 8, (5) Tues Nov 22, (6) Thurs Dec 1.
Final Exam:             45%       Tuesday December 6  10.30 a.m. - 12.30 p.m.    Comprehensive.

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.


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

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.

What is academic honesty? From the UCD Student Judicial Affairs website, examples of Academic Misconduct include:
Cheating - includes receiving or providing unpermitted assistance on exams; using unauthorized materials during an exam; altering an exam and submitting it for regrading; taking an exam for another; failing to stop working on an exam when time is called; providing false excuses to postpone tests or due dates; fabricating data or references.
Unauthorized Collaboration - working with others on graded coursework without specific permission of faculty (on in-class or take-home tests, papers, labs, or homework assignments).
Plagiarism - using another's work without giving credit. You must put others' words in quotation marks and cite your source, and must give citations when using others' ideas, even if paraphrased in your own words.
Repeated Work - Submitting the same work in more than one course, unless authorized by instructor.
Exams - "Wandering eyes," talking during exams, having notes visible, or leaving the exam room without permission.

IMPORTANT: For my class the assignment work handed in must be your own.