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Sam Watson’s journal round-up for 18th April 2016

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Life and growth. Journal of Political Economy Published 8th March 2016

The economic evaluation of the benefits of new interventions or policies often requires the discounting of benefits occurring in the future. NICE recommend a discount rate of 3.5%. One of the reasons for discounting is a diminishing marginal utility of consumption: future generations will have greater consumption and marginal utility is decreasing in consumption. A positive social discount rate for health effects is therefore implied if the consumption value of health (the amount of consumption equivalent to “one unit” of health is decreasing). However, as previous authors have noted, the consumption value of health is likely to be increasing. In this paper from Charles Jones, this idea is fully expounded and explicated. He shows that under standard assumptions about people’s preferences the value of life increases faster than that of consumption. In some cases this leads the optimal rate of consumption growth to fall to zero. As a result, interventions such as medical technologies that prolong life are valued much higher than consumption. Perhaps a negative discount rate is required after all? More on this in a future blog…

The returns to medical school: evidence from admission lotteries. AEJ: Applied Economics [RePEcPublished April 2016

The remuneration of doctors is highly topical in the UK where junior doctors are involved in a series of strikes in response to imposed contract changes from the government. This paper offers some insight into the labour market returns to medical school entry in the Netherlands. Entry into medical school in the Netherlands is decided by lottery; using this randomisation mechanism the authors compare the earnings of those who got in to those that don’t. Some people get into medical school but don’t finish and some people who don’t get in, reapply the next year. The lottery result is therefore used as an instrument for entry into the medical profession. They find that doctors earn 20% more than what they would have had they entered their next best profession, which rises to 50% after twenty years. The authors argue that this could be interpreted as meaning that state subsidies for medical education are too high. Whether this has any bearing on the debates in the UK I’ll leave to the reader.

How to translate clinical trial results into gain in healthy life expectancy for individual patients. BMJ [PubMedPublished 30th March 2016

I covered another paper in the Research Methods and Reporting series of the BMJ a couple of weeks ago. I have a high regard for these sorts of papers which translate important ideas about methods to a more general audience improving both their adoption and understanding in the medical literature. This time the paper is on translating results from clinical trials, usually reported as a change in the risk of an adverse outcome, to changes in healthy life expectancy. The paper begins by saying that cost-effectiveness studies use health life expectancy outcomes at the group level. By which I think they mean these studies look at averages. This paper discusses how this can be done at the individual patient level. But ultimately they’re just using subgroup averages (say 48 year old women). Nevertheless these distinctions can help with the communication of potentially complex statistical ideas and this series stands out from the other big four medical journals which rarely publish similar papers.

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