Health Economics.

• Position: Bureau News - Includes overview of NBER Working Paper No. 9405 - Summary of papers discussed at March 14, 2003 Program on Health Economics meeting

The NBER's Program on Health Economics met in Cambridge on March 14. Program Director Michael Grossman organized the meeting, at which these papers were discussed:

David E. Bloom, NBER and Harvard University, and David Canning and Jaypee Sevilla, Harvard University, "Health, Worker Productivity, and Economic Growth".

Jay Bhattacharya, NBER and Stanford University, and Darius Lakdawalla, NBER and RAND, "Time-Consistency and Addiction:

An Empirical Test"

Avi Dor, NBER and Case Western Reserve University, and William Encinosa, Agency for Health Care Research and Quality, "Cost-Sharing and Non-Compliance with Prescription Drugs"

Robert Kaestner, NBER and University of Illinois, Chicago; Ted Joyce and Sanders Korenman, NBER and Baruch College; and Stanley Henshaw, Alan Guttmacher Institute, "Changes in Births and Abortions Following Welfare Reform"

Nancy E. Reichman, Columbia University; Hope Corman, NBER and Rider University; and Kelly Noonan, Rider University, "Effects of Child Health on Parents' Relationship Status"

Anthony T. Lo Sasso, Northwestern University, and Thomas C. Buchmueiler, NBER and University of California, Irvine, "The Effect of the State Children's Health Insurance Program on Health Insurance Coverage" (NBER Working Paper No. 9405)

Microeconomic analyses typically suggest that worker health makes an important contribution to productivity and wages. Weil (2001) uses estimates of the individual-level relationship between health and wages to calibrate an aggregate production function and suggests that differences in health are roughly as important as differences in education in explaining cross-country differences in gross domestic product per worker. Bloom, Canning, and Sevilla directly estimate the effect of health on worker productivity using cross-country macroeconomic data. They find a positive and significant effect. In addition, the estimated effect of health on aggregate output is consistent with the size of the effect found in microeconomic studies.

In the past, many economists have treated smokers and addicts as rational, time-consistent utility-maximizers. In recent years, that view has come under attack by those who argue that smokers and other addicts exhibit time-inconsistency and problems of self-control. This conflict is significant, but intractable, because these two theories have very similar positive implications but wildly different normative ones. However, while the positive implications are qualitatively...