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The genesis of Health Economics in Kenneth Arrow (1963)

Author

Listed:
  • Jairo Restrepo

    (Universidad de Antioquia)

  • Kristian Rojas

    (Fundación ECSIM)

Abstract

Kenneth J. Arrow is one of the most prominent economists of the twentieth century. His concerns about competitive equilibrium and optimality under uncertainty conditions led him to publish what would be recognized as the seminal article on Health Economics, “Uncertainty and the welfare economics of medical care”. This essay pays tribute to Arrow’s work and discusses the intellectual foundations of the analysis of medical benefits in a welfare economics context, the validity of Arrow’s original approach and its main implications. Here, the validity of Arrow’s central hypothesis on the impossibility of reaching an efficient resource allocation through the market is defended, mainly because of the uncertainty associated to disease incidence. Also, implications of asymmetric information, moral hazard and social norms are discussed from Arrow’s perspective, as well as the roles of state and market.

Suggested Citation

  • Jairo Restrepo & Kristian Rojas, 2016. "The genesis of Health Economics in Kenneth Arrow (1963)," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 84, pages 209-242, Enero - J.
    • Handle: RePEc:lde:journl:y:2016:i:84:p:209-242
    DOI: 10.17533/udea.le.n84a07
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    More about this item

    Keywords

    Health Economics; welfare; Arrow; health services; market failures;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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