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A Theory of Health Disparities and Medical Technology

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Author Info
Dana Goldman (RAND Corporation and NBER)
Darius Lakdawalla (RAND Corporation and NBER)

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Abstract

Better-educated people are healthier, although the sources of this relationship remain unclear. Starting with basic principles of consumer theory, we develop a model of how health disparities are determined that does not depend on the precise causal mechanism. Improvements in the productivity of health care disproportionately benefit the heaviest health care users. Since richer patients tend to use the most health care, this suggests that new technologies--by making more diseases treatable, reducing the price of health care, or improving health care productivity--could widen socioeconomic disparities in health. An exception to this rule, however, is a simplifying technology, which can contract health disparities, since richer patients are more likely to invest effort in adhering to complex treatment regimens. We present a few empirical case studies to help illustrate the theoretical results. First, we show that a complicated treatment regimen (antiretroviral therapy for HIV) benefited well-educated patients disproportionately. In contrast, simplifying drugs for hypertension coincided with a contraction in cardiovascular disparities not seen in other diseases. Finally, nationally representative data suggest that there are wider disparities by education among the chronically ill populations--precisely the population one would expect to be the heaviest health care users.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Contributions to Economic Analysis & Policy.

Volume (Year): 4 (2005)
Issue (Month): 1 ()
Pages: 1395-1395
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Handle: RePEc:bep:eapcon:v:4:y:2005:i:1:p:1395-1395

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Related research
Keywords: socioeconomic status health disparities technology medical care

References listed on IDEAS
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  1. Dana P. Goldman & James P. Smith, 2004. "Can Patient Self-Management Help Explain the SES Health Gradient?," HEW 0403004, EconWPA. [Downloadable!]
  2. Anne Case & Darren Lubotsky & Christina Paxson, 2002. "Economic Status and Health in Childhood: The Origins of the Gradient," American Economic Review, American Economic Association, vol. 92(5), pages 1308-1334, December. [Downloadable!]
    Other versions:
  3. Janet Currie & Mark Stabile, 2003. "Socioeconomic Status and Child Health: Why Is the Relationship Stronger for Older Children?," American Economic Review, American Economic Association, vol. 93(5), pages 1813-1823, December. [Downloadable!]
  4. Anne C. Case & Angus Deaton, 2003. "Broken Down by Work and Sex: How Our Health Declines," NBER Working Papers 9821, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence From Heart Attack Treatments," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 991-1024, November. [Downloadable!] (restricted)
  6. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July. [Downloadable!] (restricted)
  7. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr. [Downloadable!] (restricted)
  8. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 287-305, April. [Downloadable!] (restricted)
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  9. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Working Papers 0539, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Adriana Lleras-Muney, 2002. "The Relationship Between Education and Adult Mortality in the United States," NBER Working Papers 8986, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May. [Downloadable!] (restricted)
  12. Becker, Gary S & Mulligan, Casey B, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 729-58, August.
  13. Selma J. Mushkin, 1962. "Health as an Investment," Journal of Political Economy, University of Chicago Press, vol. 70, pages 129. [Downloadable!] (restricted)
  14. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb.. [Downloadable!] (restricted)
  15. Cutler, David M. & Huckman, Robert S., 2003. "Technological development and medical productivity: the diffusion of angioplasty in New York state," Journal of Health Economics, Elsevier, vol. 22(2), pages 187-217, March. [Downloadable!] (restricted)
    Other versions:
  16. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring. [Downloadable!] (restricted)
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