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Economic analysis for health projects


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  • Hammer, Jeffrey S.


The author applies to the health sector an approach to analyzing projects advocated in a recent paper by Devarajan, Squire, and Suthiwart-Narueput. In the health sector, a project evaluation should: 1) Establish a firm justification for public involvement. The author identifies a number of common failures in the markets for both health services and insurance but argues that this should be the starting place for economic analysis, not a reason to ignore economics; 2) Establish the counterfactual: what happens with and without the project. Project outputs should be predicted net of the reaction of consumers and providers in the private sector. This requires knowledge of the market structure (supply, demand, and equilibrium) for health services; 3) Determine the fiscal effect of the project. The issue of appropriate levels for fees should be handled jointly with project evaluation; and 4) Acknowledge the fungibility of project resources and examine the incentives facing public servants. Ministries of health may shift their own resources away from activities that are funded by project to those that are not evaluated at all. Project outputs depend on the incentives for civil servants to provide good service--a consideration rarely taken into account in project evaluations. The author concludes that much of the analysis relevant to projects should be done before project evaluation. If the issues of fungibility and incentives are given due respect, the donors'best form of intervention may not be traditional projects at all but rather general loans with conditions related to general sector strategy and reform. For a standard project, a fair amount of information from supporting sector work is needed before evaluation. If clinical services (or anything depending on people s behavior) are part of the project, information is needed about the supply and demand for substitute services. The market structure of health care is an essential part of the background work.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1611.

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Date of creation: 31 May 1996
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Handle: RePEc:wbk:wbrwps:1611

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Keywords: Public Health Promotion; Environmental Economics&Policies; Health Systems Development&Reform; Health Economics&Finance; Health Monitoring&Evaluation; Health Economics&Finance; Health Monitoring&Evaluation; Environmental Economics&Policies; Health Systems Development&Reform; Economic Theory&Research;

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  1. Germano Mwabu & Martha Ainsworth & Andrew Nyamete, 1993. "Quality of Medical Care and Choice of Medical Treatment in Kenya: An Empirical Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 838-862.
  2. Pritchett, Lant H. & DEC, 1994. "Desired fertility and the impact of population policies," Policy Research Working Paper Series 1273, The World Bank.
  3. Anand, S. & Hanson, K., 1995. "Disability-Adjusted Life Years: A Critical Review," Economics Series Working Papers 99174, University of Oxford, Department of Economics.
  4. Hammer, Jeffrey S. & Berman, Peter, 1995. "Ends and means in public health policy in developing countries," Health Policy, Elsevier, Elsevier, vol. 32(1-3), pages 29-45.
  5. Hammer, Jeffrey S, 1997. "Prices and Protocols in Public Health Care," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(3), pages 409-32, September.
  6. Kim, A. & Benton, B., 1995. "Cost-Benefit Analysis of the Onchocerciasis Control Program (OCP)," Papers, World Bank - Technical Papers 282, World Bank - Technical Papers.
  7. Alderman, Harold & Lavy, Victor, 1996. "Household Responses to Public Health Services: Cost and Quality Tradeoffs," World Bank Research Observer, World Bank Group, World Bank Group, vol. 11(1), pages 3-22, February.
  8. Anand, Sudhir & Hanson, Kara, 1997. "Disability-adjusted life years: a critical review," Journal of Health Economics, Elsevier, Elsevier, vol. 16(6), pages 685-702, December.
  9. Kloos, Helmut, 1990. "Utilization of selected hospitals, health centres and health stations in Central, Southern and Western Ethiopia," Social Science & Medicine, Elsevier, Elsevier, vol. 31(2), pages 101-114, January.
  10. Hammer, Jeffrey S, 1993. "The Economics of Malaria Control," World Bank Research Observer, World Bank Group, World Bank Group, vol. 8(1), pages 1-22, January.
  11. Pitt, Mark M & Rosenzweig, Mark R & Gibbons, Donna M, 1993. "The Determinants and Consequences of the Placement of Government Programs in Indonesia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 7(3), pages 319-48, September.
  12. Korte, R. & Richter, Heide & Merkle, F. & Görgen, H., 1992. "Financing health services in Sub-Saharan Africa: Options for decision makers during adjustment," Social Science & Medicine, Elsevier, Elsevier, vol. 34(1), pages 1-9, January.
  13. Paul Gertler & John Molyneaux, 1994. "How economic development and family planning programs combined to reduce indonesian fertility," Demography, Springer, Springer, vol. 31(1), pages 33-63, February.
  14. Alderman, H. & Gertler, P., 1989. "The Substitutability Of Public And Private Health Care For The Treatment Of Children In Pakistan," Papers, World Bank - Living Standards Measurement 57, World Bank - Living Standards Measurement.
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Cited by:
  1. Shantayanan Devarajan & F. Halsey Rogers, 2002. "World Bank Economists' Forum : Volume 2," World Bank Publications, The World Bank, number 15227, August.
  2. Belli, Pedro, 1997. "The comparative advantage of government : a review," Policy Research Working Paper Series 1834, The World Bank.
  3. Devarajan, Shantayanan & Hammer, Jeffrey S., 1998. "Risk reduction and public spending," Policy Research Working Paper Series 1869, The World Bank.
  4. Pritchett, Lant & Samji, Salimah & Hammer, Jeffrey, 2013. "It's All about MeE: Using Structured Experiential Learning ("e") to Crawl the Design Space," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp13-012, Harvard University, John F. Kennedy School of Government.
  5. Hentschel, Jesko, 1998. "Distinguishing between types of data and methods of collecting them," Policy Research Working Paper Series 1914, The World Bank.
  6. Filmer, Deon & Pritchett, Lant, 1997. "Child mortality and public spending on health : how much does money matter?," Policy Research Working Paper Series 1864, The World Bank.
  7. Gertler, Paul J., 1998. "On the road to social health insurance: the Asian experience," World Development, Elsevier, Elsevier, vol. 26(4), pages 717-732, April.
  8. Gertler, Paul J. & Hammer, Jeffrey S., 1997. "Strategies for pricing publicly provided health services," Policy Research Working Paper Series 1762, The World Bank.
  9. Alderman, Harold & Orazem, Peter & Paterno, Elizabeth M., 2001. "School Quality, School Cost, and the Public/Private School Choices of Low-Income Households in Pakistan," Staff General Research Papers, Iowa State University, Department of Economics 1970, Iowa State University, Department of Economics.
  10. World Bank, 2002. "Guyana : Public Expenditure Review," World Bank Other Operational Studies 14574, The World Bank.
  11. Bichaka Fayissa, 2001. "The determinants of infant and child mortality in developing countries: The case of Sub-Sahara Africa," The Review of Black Political Economy, Springer, Springer, vol. 29(2), pages 83-98, December.
  12. Jack, William, 2000. "Health insurance reform in four Latin American countries : theory and practice," Policy Research Working Paper Series 2492, The World Bank.
  13. Chaudhury, Nazmul & Hammer, Jeffrey S., 2003. "Ghost doctors - absenteeism in Bangladeshi health facilities," Policy Research Working Paper Series 3065, The World Bank.


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