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Economic analysis for health projects

Author

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  • Hammer,Jeffrey S.

Abstract

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, thedonors'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.

Suggested Citation

  • Hammer,Jeffrey S., 1996. "Economic analysis for health projects," Policy Research Working Paper Series 1611, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1611
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    References listed on IDEAS

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    1. 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, vol. 34(1), pages 1-9, January.
    2. Pritchett, Lant H. & DEC, 1994. "Desired fertility and the impact of population policies," Policy Research Working Paper Series 1273, The World Bank.
    3. Paul Gertler & John Molyneaux, 1994. "How economic development and family planning programs combined to reduce indonesian fertility," Demography, Springer;Population Association of America (PAA), vol. 31(1), pages 33-63, February.
    4. Kloos, Helmut, 1990. "Utilization of selected hospitals, health centres and health stations in Central, Southern and Western Ethiopia," Social Science & Medicine, Elsevier, vol. 31(2), pages 101-114, January.
    5. Hammer, Jeffrey S. & Berman, Peter, 1995. "Ends and means in public health policy in developing countries," Health Policy, Elsevier, vol. 32(1-3), pages 29-45.
    6. 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.
    7. Hammer, Jeffrey S, 1997. "Prices and Protocols in Public Health Care," World Bank Economic Review, World Bank Group, vol. 11(3), pages 409-432, September.
    8. Kim, A. & Benton, B., 1995. "Cost-Benefit Analysis of the Onchocerciasis Control Program (OCP)," Papers 282, World Bank - Technical Papers.
    9. Alderman, H. & Gertler, P., 1989. "The Substitutability Of Public And Private Health Care For The Treatment Of Children In Pakistan," Papers 57, World Bank - Living Standards Measurement.
    10. Hammer, Jeffrey S, 1993. "The Economics of Malaria Control," World Bank Research Observer, 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, vol. 7(3), pages 319-348, September.
    12. Anand, S. & Hanson, K., 1995. "Disability-Adjusted Life Years: A Critical Review," Economics Series Working Papers 99174, University of Oxford, Department of Economics.
    13. Alderman, Harold & Lavy, Victor, 1996. "Household Responses to Public Health Services: Cost and Quality Tradeoffs," World Bank Research Observer, World Bank Group, vol. 11(1), pages 3-22, February.
    14. Anand, Sudhir & Hanson, Kara, 1997. "Disability-adjusted life years: a critical review," Journal of Health Economics, Elsevier, vol. 16(6), pages 685-702, December.
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    1. repec:pri:rpdevs:hammer_its_all_about_me is not listed on IDEAS
    2. Pritchett, Lant & Samji, Salimah & Hammer, Jeffrey S., 2012. "It's All about MeE: Using Structured Experiential Learning ('e') to Crawl the Design Space," WIDER Working Paper Series 104, World Institute for Development Economic Research (UNU-WIDER).
    3. Chaudhury, Nazmul & Hammer, Jeffrey S., 2003. "Ghost doctors - absenteeism in Bangladeshi health facilities," Policy Research Working Paper Series 3065, The World Bank.
    4. Gertler, Paul J. & Hammer, Jeffrey S., 1997. "Strategies for pricing publicly provided health services," Policy Research Working Paper Series 1762, The World Bank.
    5. Belli, Pedro, 1997. "The comparative advantage of government : a review," Policy Research Working Paper Series 1834, The World Bank.
    6. World Bank, 2002. "Guyana : Public Expenditure Review," World Bank Other Operational Studies 14574, The World Bank.
    7. Harold Alderman & Peter F. Orazem & Elizabeth M. Paterno, 2001. "School Quality, School Cost, and the Public/Private School Choices of Low-Income Households in Pakistan," Journal of Human Resources, University of Wisconsin Press, vol. 36(2), pages 304-326.
    8. Gertler, Paul J., 1998. "On the road to social health insurance: the Asian experience," World Development, Elsevier, vol. 26(4), pages 717-732, April.
    9. Devarajan, Shantayanan & Hammer, Jeffrey S., 1998. "Risk reduction and public spending," Policy Research Working Paper Series 1869, The World Bank.
    10. Shantayanan Devarajan & F. Halsey Rogers, 2002. "World Bank Economists' Forum : Volume 2," World Bank Publications, The World Bank, number 15227, December.
    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;National Economic Association, vol. 29(2), pages 83-98, December.
    12. 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.
    13. Jack, William, 2000. "Health insurance reform in four Latin American countries : theory and practice," Policy Research Working Paper Series 2492, The World Bank.
    14. Hentschel, Jesko, 1998. "Distinguishing between types of data and methods of collecting them," Policy Research Working Paper Series 1914, The World Bank.

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