Sherman Folland

Sources of small area variations in the use of medical care

This paper develops an economic model of physician care utilization which incorporates the uncertainty and practice style hypotheses proposed by Wennberg and others as explanations of the substantial intermarket variations in per capita utilization rates of many medical and surgical procedures. Practice style, which is distinguished from inducement, is modeled as a set of physician beliefs about the production function of health. In the model, per capita utilization is decomposed into a first occurrences demand and an intensity demand. It is argued that the influence of practice style affects primarily the intensity with which physicians treat their patients. Alternative tests are proposed and carried out on a comprehensive aggregated measure of physician care utilization for market areas in Michigan. Although practice style is undoubtedly important for some individual procedures, the empirical results indicate that it is unimportant in determining either an aggregated index of market area utilization or the average intensity with which patients are treated by physicians.

An economic model of social capital and health.

This paper presents an economic model to connect with the substantial empirical literature on social capital and health that exists largely outside of economics. Representative papers from that literature are reviewed and these show that disagreements exist on the nature and definition of social capital. The paper presents a new line of reasoning to support the view of social capital as a network of interpersonal bonds to include the bonds of family and close friends, not just the community at large. It then adapts and extends the work of Becker and Murphy on social economics to explain the demand for health goods as well as health bads in the presence of increased social capital. It further develops choice under risk to explain the demand for goods that entail a risk of death, such as cigarettes, illegal drugs, or excessive drinking. Empirical examples, including new statistical analyses are presented to illustrate the derivations.

Externalities of Nuclear Power Plants: Further Evidence

Several prior studies found no detrimental external effects of nuclear power plants when estimating the distance gradient for housing prices within a hedonic model. Other papers found significant negative effects of nuclear power when studying real asset prices in cross sections of broad market areas.We suggest a resolution and verify that an installation effect occurs after controlling for the tendency of facility builders to seek out cheap land. The study assembles a panel of all commercial market areas, including indicators for nuclear facilities, in the contiguous United States observed 11 times over roughly equal intervals covering the span from 1945 to 1992. Copyright 2000 Blackwell Publishers

Advertising by Physicians: Behavior and Attitudes

This article analyzes 380 responses to a systematic sample of 800 physicians in Pennsylvania regarding their advertising behavior and attitudes. The use of advertising is growing despite the fact that most of these physicians are averse to advertising and pessimistic about its effects. Several multivariate techniques are applied to generate a statistical model of the probability that a given physician will advertise. The proportion of physicians who advertise is quite small, and it remains difficult to predict accurately whether a given physician will advertise. Nevertheless, the results suggest several factors that influence the decision. The advertisers are significantly younger than their peers. In addition, advertising is somewhat more prominent among physicians in larger group practices, among primary care physicians, and among those physicians for whom the chief means of reimbursement is the prepayment contract. The research has relevance for health care marketing and for policy analysis concerned with the effects of recent court decisions that remove restrictions on physician advertising.

The Effects of Health Care Advertising

This paper begins by assessing the current status of health care advertising and its potential for growth, arguing that this form of marketing is not just a passing fad among a few clinics and hospitals. It then describes the opposing schools of thought concerning the economics of advertising, and considers both theory and evidence on the effects of advertising on prices, profits, quality, utilization, and innovation.

The relative efficiency of slave agriculture: a comment

In their book Time on the Cross, Fogel and Engerman (FE) present evidence that average factor productivity was greater for larger Southern slave farms in 1860 than for both free farms and smaller slave farms. In a recent article, Field (1988) lends support to the FE theory by finding that an upward shift in the production function occurs for slave farms at 15 slaves, the size at which FE propose that gang labour became feasible. In a more recent article, Grabowski and Pasurka (GP) contradict both FE and Field by finding that there was no relationship between the size of slave farms and their efficiency. The present paper extends both GPs and Fields work and refines a point made by FE. We distinguish between a technological advantage due to the gang labour system and revenue inefficiency due both to the incentive structure of slavery and the repugnance of gang labour, two factors which foster rational shirking and resistance by slaves. That is, we propose that relative to small slave farms, large slave f...

A Critique of Pure Need: An Analysis of Norman Daniels' Concept of Health Care Need

Norman Daniels has presented a concept of health care need which he proposes as the basis for the distribution of health care resources, plausibly to define and provide a philosophical justification for a decent minimum of health care. Daniels′ construction is reconsidered and criticisms both from the literature and those new to this discussion are investigated.

State Income, Employment, Infrastructure and Well-Being: Do Party Control and Political Competition Matter?

This paper examines the relationship between state party politics and the economic performance of the state over six four-year periods covering the years 1978 to 2002. Novel features include that the study: examines the role of party control in a panel; it examines the effects of political competitiveness; measures effects not only on income variables but also on employment, tax, and spending policies, infrastructure investment, and quality of life variables. The main finding is that control of the executive branch, the legislative branch, or both branches, has no significant effect on state outcomes, but the degree of political competitiveness in these data reveals significant and usually beneficial effects on employment and on quality of life outcomes. The paper also investigates possible factors that could otherwise mistakenly account for the negative conclusion on party control. We hypothesize that both parties, when in competition for votes, will adopt those economic policies believed to be effective by the politically median voter, regardless of party stereotypes, but that the competition between the parties may provide benefits to the public.

Smoking, Binge Drinking and the Social Capital of Marriage and Children

The paper develops a model of decision making under risk where the tradeoff between risk and reward is modulated by exogenous changes in social capital. This latter is defined as fundamentally constituted by those significant and beneficial relationships one has in spouse, children, friends and community. The social capital elements studied empirically here are those of spouse and children. The National Longitudinal Survey of Youth 1979, which surveys over 12,000 individuals followed from 1979 to the present, forms the database for the study. Regression and logit analysis of both the levels and the changes in smoking and of binge drinking following exogenous changes in social capital tend to support the hypotheses that social capital will reduce the probability of behaviors entailing a risk of ill health or death.

Who Teaches College Economics? Students or Professors?

A value added panel and a larger posttest sample are applied to test hypotheses regarding the common influences on student performance on the TUCE III. Common influences, those shared by all students in a given classroom, included: day vs. night time of course; class size; peer effects; and teacher effects. Samples of 500 pre-test students and 400 post tests, collected over a three year period, were matched to the Registrars student records, Admissions Office records, responses to a survey of the teachers and to department records. Operating by random chance, 76 pretest students were resampled on posttests, these form a value added panel. Complete data for posttest students included 232 cases. These researches find that: The observed beneficial effects on both value added and posttest TUCE III scores apparently due to the stimulus of the students peers is most likely spurious, a reflection of the common influence of the teacher. Instead the largest influences on student success in economics are probably the teacher and the students own intellectual human capital.