PAM 4380 january 31 2011 - PAM 4380: 1/31/2011 2. Economics...

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PAM 4380: 1/31/2011 2. Economics versus Public Health: An Overview 2.1 Brief introduction to positive health economics = framework used by economists as social scientists to understand health behaviors Constrained maximization (today’s lecture, similar to Cawley pp. 117 – 120) Individual demand functions for market goods related to health (lecture notes) Blackboard site: review Chapter on microeconomics Next time: Normative economics = framework from applied welfare economics to evaluate whether health interventions improve societal welfare
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Economic model of health behavior Consumer makes choices that maximize utility, subject to constraints Utility = U (A, B, C, …Health) Constrained by availability of money & time, and technology (health production function) Maximizing U is not the same as maximizing H Consumer is willing to make tradeoffs between H and goods A, B, C, … We do it all the time Diminishing marginal rate of substitution: at low levels of H, not willing to give it up unless given a lot of something else
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PAM 4380 january 31 2011 - PAM 4380: 1/31/2011 2. Economics...

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