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Health Economics

  • Teacher(s)
    Maarten Lindeboom, Owen O'Donnell
  • Research field
    Empirical Microeconomics
  • Dates
    Period 3 - Jan 02, 2023 to Feb 24, 2023
  • Course type
  • Program year
  • Credits

Course description

Health is an important dimension of wellbeing. Its value is evident from our willingness in high-income countries to spend around 9 percent of GDP on healthcare. And in the US, almost twice this fraction of income is spent on healthcare. Health economics examines whether the level of health spending is efficient and its distribution is fair. It is also concerned with how to finance this spending to strike the right balance between efficiency and equity. Less obviously perhaps, economics can be used to explain variation in health itself by viewing health behaviour as resulting from constrained optimisation of either a fully rational agent or one that is prone to psychological biases. In addition to explaining health behaviour, economics examines the influence of health on economic behaviour and outcomes. Current circumstances make it all too evident that economic activity is highly contingent on population health.

This course covers some of these health-related applications of economics. The first session examines health inequality. We evaluate the success of economic theory and empirical methods in explaining differences in health by education, wealth and income. The second session considers effects of health on economic behaviour and outcomes. While the research discussed in the first two sessions seeks to explain phenomena, the third session turns to research with a prescriptive purpose: the design of policies to control communicable diseases and prevent non-communicable ones. The fourth session switches attention from health to the financing of healthcare; specifically, the efficiency of health insurance, and its potential contribution to the much higher spending on healthcare in the US.

The fifth session examines the hypothesis that health and economic outcomes in adult life and old age are the result of long run mechanisms that originate very early in life. The penultimate session examines socioeconomic determinants of a major cause of ill-health – smoking – while the last session considers the impact of work and retirement on health.


You should have completed a course in Advanced Microeconomics.

Course literature

Videos and slides posted on Canvas, plus reading (see syllabus posted on Canvas).