HEALTH ECONOMICS (Econ 132) 
[http://cameron.econ.ucdavis.edu/e132/e132syl.html]
Department of Economics, University of California - Davis
FALL 2019
  SYLLABUS

Instructor:
Professor Colin Cameron,  1124 Social Sciences and Humanities
Email: accameron@ucdavis.edu  Website: http://www.econ.ucdavis.edu/faculty/cameron

Meeting: Tues Thurs 9.00 - 10.20 am  Wellman 106

Office Hours:  Monday      12.30-2.00 p.m. 
                         Wednesday  3.00-4.30 p.m.

Teaching Assistants: 

Han He  hanhe@ucdavis.edu                                 Office hours: Wednesday 1-2 pm in room  SSH 0118
Joshua Grelewicz   jbgrelewicz@ucdavis.edu       Office hours: Wednesday 4-5 pm in room  SSH 0116
Natalia Orlova   norlova@ucdavis.edu                  Office hours: Tuesday 12-1 pm in room  SSH 0118
Cynthia Van Der Werf Cuadros  cvanderwerf@ucdavis.edu   Office hours: Tuesday 3-4 pm in SSH 0116

Discussion Sections:
A01:  Wednesday 10.00 - 10.50 am  93 Hutchison    Cynthia Van Der Werf Cuadros 
A02: Wednesday 11.00 - 11.50 am  93 Hutchison      Han He   
A03: Wednesday   2.10 - 3.00 pm  93 Hutchison       Natalia Orlova 
A04: Wednesday   3.10 - 4.00 pm  93 Hutchison       Joshua Grelewicz      

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.

Pre-requisites:
Economics 100 or 100A or ARE 100A (intermediate microeconomics) or consent of instructor.
Mathematics 16A-B: These are a pre-requisite for Economics 100/100A.
Regression class (upper division): one of Economics 102, Economics 140, ARE 106, Statistics 108 or consent of instructor.

COURSE OUTLINE: 

A. Introduction, Overview of U.S. Health Market, getting started in Stata
Class 1.     Supplemental Notes.  (Bhattacharya Chapter 1)

B. Health Insurance in the U.S.: Facts, definitions and Rand experiment
Classes 2-3.   Supplemental Notes.  (Bhattacharya Ch.18)

C. Economics of Health Insurance: Risk pooling, risk aversion, moral hazard 
Classes 4-6.   Supplemental Notes.  (Bhattacharya Chs.7, 8, 9.11-9.12)

***** Class 7  Midterm Exam 1   *****

C. Economics of Health Insurance: moral hazard, adverse selection, other countries
Class 8-9.   Supplemental Notes.  (Bhattacharya Chs.11)

D. Economic Evaluation of Health Services: cost-benefit and cost-effectiveness analysis
Classes 10-11.  Supplemental Notes.  (Bhattacharya Ch.14)

E. Demand for Health Care: Grossman model
Classes 12.  Supplemental Notes.  (Bhattacharya Chs.2-3)

*****   Classes 13  Second Midterm exam

F. Suppliers: Physicians, hospitals, pharmaceuticals
Class 14-16.  Supplemental Notes.  (Bhattacharya Ch. 12)

G. Government's Role in Health Care
Class 17.  Supplemental Notes.  (Bhattacharya Ch. 20)

H. Medical Technology
Class 18

I. International Comparisons
Class 19. Supplemental Notes.  (Bhattacharya Ch. 15)

Class 20.  Review of Course

COURSE MATERIALS

Key material is posted at the course Canvas site (http://canvas.ucdavis.edu)
This includes complete slides for the course (under Files / Lecture slides) and homeworks (under Files / Homeworks)
 Additionally, some past exams and solutions are at http://cameron.econ.ucdavis.edu/e132/e132.html

Lecture slides: 
Lecture Slides are posted at the course Canvas site (http://canvas.ucdavis.edu) under Files / Lecture Slides.

Textbook: Not required 
I give references to this book in the syllabus for those who want to read more about health economics.
Jay Bhattacharya, Timothy Hyde and Peter Tu: Health Economics, First edition, Palgrave MacMillan, 2014.
Copies of the textbook are on two-hour reserve in Shields Library.

Stata for regression:
Part of the course entails analyzing health-related data using regression methods with the statistical package STATA.
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, 2060 Scilab and the Virtual Lab (after 2060 SciLab closes - see http://virtuallab.ucdavis.edu)
To see whether 93 Hutchison and 2060 SciLab are available see http://computerrooms.ucdavis.edu/available/. 

If you choose to purchase Stata go to https://www.stata.com/order/new/edu/gradplans/student-pricing/
For this course and other economics classes Stata/IC is more than adequate and costs $48 (6 months), $94 (1 year); $225 (permanent copy).
To install Stata after it is purchased:
(1) Choose the correct operating system (e.g. Windows or Mac);
(2) Choose the correct version of Stata - the student price version is Stata/IC;
(3) When you first run Stata after installation it will ask for an "authorization code". These codes are given in a pdf attachment you will received in the email from Stata following purchase (some codes are lengthy and it is easiest to cut and paste them in).

To get started in Stata see http://cameron.econ.ucdavis.edu/stata/stata.html  and especially http://cameron.econ.ucdavis.edu/stata/stataintro.html
Discussion sections will be in computer labs and include going through Stata.

For a summary of the data methods we use see file tr132statistics.pdf at the Canvas site (under Files / Statistics for 132)

Supplementary Material:
The UCSD Intermediate Microeconomics videos on topics such as externalities are at the course Canvas site under Assignments /  UCSD Intermediate Micro Handbook.

COURSE GRADING

Midterm Exam 1:   22.5%    Thursday October 17
Midterm Exam 2:   22.5%     Thursday November 7
Assignments:           10%       Due 9.00 a.m.  Tuesdays Oct 8, Tues Oct 15, Oct 29, Nov 5, Thursdays Nov 21, Dec 5.
Final Exam:             45%       Friday December 13 3.30 p.m. - 5.30 p.m.    Comprehensive.

Assignments are posted on Canvas under Files / Homeworks. They are to be turned in at class.
Doing the assignments is a valuable part of learning both health economics and data analysis using Stata. 
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. Assignments must be handed in on time, so solutions can be discussed in class and distributed in a timely manner. No credit for late assignments.

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: approximately 20% on material up to first midterm, 40% on material from first midterm to end of class 14; 30% on classes 17-19; and 10% on regression with Stata.

 FOR EXAMS YOU NEED TO BRING YOUR STUDENT PHOTO ID.
I WILL DECIDE WHERE TO SEAT YOU.
CALCULATORS WILL BE PROVIDED - you must not use your own calculator or smartphone. 

Scores are posted at Canvas. You have one week from when work is first returned in class (or in discussion section in the case of assignments), to raise any questions about grading.

Note that there is no automatic conversion formula such as an 85 is a B. Instead if 85 was the median (middle) score among all students who took the class then you would get the median grade which is most often a B-. To let you know how you are going on each exam I give the distribution of the scores for the exam along with a "suggestive" grading curve. But the course grade is based on a course curve.

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).

Grading policy: The average GPA in Economics major courses in most cases is around 2.7. There is no restriction on the exact fraction of course grades that are A's, B's, ....., F's.

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

Academic Honesty: Academic dishonesty is unfair to the majority of students who are honest. To that end the Davis Division of the U.C. Faculty Senate has the following policies.
(1) All undergraduate and graduate course outlines (syllabi) should list or provide a link to the U.C. Davis Code of Academic Conduct which is at sja.ucdavis.edu/files/cac.pdf . This provides many leading examples of academic misconduct. You should read this.
(2) One specific example of academic honesty is copying from solutions to assignments given in previous 132 courses.
(3) If an instructor has a reasonable suspicion of academic misconduct, whether admitted by the student or not, the instructor shall report the matter to the Office of Student Support and Judicial Affairs.
(4) The instructor has authority to determine a grade penalty when academic misconduct is admitted or is determined by adjudication to have occurred; with a
maximum grade penalty of “F” for the course.
Note that Student Support and Judicial Affairs may separately impose sanctions for academic misconduct, including community service, suspension and dismissal.

Out of class collaboration: You are allowed to work together in groups for the assignments, but each student must turn in an individual solution. Please indicate on the solution the names of the other students you worked with, if any that you worked with you on the problem set. And for Stata, each person must create their own Stata output and write up their own answers. It is not a violation of this policy to submit essentially the same answer on an assignment as another student, but it is a violation of this policy to submit a close to exact or exact copy.

The most common form of academic misconduct in Economics 132 is copying from past assignment solutions or copying (close to exact or exact) from other students.
Students found copying will automatically be reported to Student Support and Judicial Affairs. In addition to any penalty SSJA give, the most common grading penalty for doing so will be to receive zero for that assignment and additionally reducing the course grade by one grade (examples: a B becomes a C, or a B- becomes a C-).

It is very easy for copying on assignments to be detected. In Fall 2018 there were 15 out of 96 students in ECN 132 reported to Student Support and Judicial Affairs. Penalties included suspension for one, two and three quarters. If you do not have time to do the assignment yourself then just don't do it.