Review: Health Econometrics Using Stata (Partha Deb et al)

Health Econometrics Using Stata

Partha Deb, Edward C. Norton, Willard G. Manning

Paperback, 264 pages, ISBN: 978-1-59718-228-7, published 31 August 2017

Amazon / Google Books / Stata Press

This book is the perfect guide to understanding the various econometric methods available for modelling of costs and counts data for the individual who understands econometrics best after applying it to a dataset (like myself). Pre-requisites include a decent knowledge of Stata and a desire to apply econometric methods to a cost or count outcome variable

It’s important to say that this book does not cover all aspects of econometrics within health economics, but instead focuses on ‘modelling health care costs and counts’ (the title of the short course from which the book evolved). As expected from this range of texts, the vast majority of the book comes with detailed example Stata code for all of the methods described, with illustrations either using a publicly available sample of MEPS data or simulated data.

Like many papers in this field, the focus of the book revolves around the non-normal characteristics of health care resource use distributions. These are the mass point at zero, right-hand skew and inherent heteroskedasticity. As such the book covers the broad suite of models that have been developed in order to account for these features, ranging from two-part models, transformation of the data (and the problematic re-transformation of estimated effects) to non-linear modelling methods such as generalised linear models (GLMs). Unlike many papers in this field, the authors emphasise the need – and provide guidance on how – to delve deep into the underlying data in order to appreciate the most appropriate methods (there is even a chapter on design effects) and encourage rigorous testing of model specification. In addition, Health Econometrics Using Stata considers the important issue of endogeneity and is not solely fixated on distributional issues, providing important insight and code for estimation of non-linear models that control for potential endogeneity (interested readers may wish to heed the published cautionary notes for some of these methods, e.g. Chapman and Brooks). Finally, the book describes more advanced methods for estimating heterogeneous effects, although code is not provided for all of these methods, which is a bit of a shame (but perhaps understandable given the complexity).

This could be a very dry text, but it is not – emphatically! The personality of the authors comes through very strongly from the writing. Reading it brought back many pleasant memories from the course ‘modelling health care costs and counts’ that I sat in 2012. The book also features a dedication to Willard Manning, which is a fitting tribute to a man who was both a great academic and an outstanding mentor. One particular highlight, with which past course attendants will be familiar, is the section ‘top 10 myths in health econometrics’. This straightforward and punchy presentation, backed up by rigorous methodological research, is a great way to get these key messages across in an accessible format. Other great features of this book include the use of simulations to illustrate important features of the econometric models (with code provided to recreate) and a personal highlight (granted, a niche interest…) was the code to generate appropriate standard errors when using the poisson family within GLMs for costs.

Of course, Health Econometrics Using Stata cannot be comprehensive and there are developments in this field that are not covered. Most notably, there is no discussion of how to model these data in a panel/longitudinal setting, which is crucially important for estimating parameters for decision models, for example. Potential issues around missing data and censoring are also not discussed. Also, this text does not cover advances in flexible parametric modelling, which enable modelling of data that are both highly skewed and leptokurtic (see Jones 2017 for an excellent summary of this literature along with a primer on data visualisation using Stata).

I heartily recommend Health Econometrics Using Stata to interested colleagues who want practical advice – on model selection and specification testing with cost and count outcome data – from some of the top specialists in our field, in their own words.


Review: The Passionate Economist (Sally Sheard)

Credit: Policy Press

Credit: Policy Press

The Passionate Economist: How Brian Abel-Smith shaped global health and social welfare

Hardcover, 581 pages, ISBN: 9781447314844, published 21 November 2013

Amazon / Google Books / Policy Press

I enjoy reading about the lives of effective academics. Sally Sheard’s biography of Brian Abel-Smith drew me in with its title: ‘The Passionate Economist’. It hints at a life to which some of us might aspire.

Brian Abel-Smith was an economist who straddled academia and politics. He spent much of his career with the LSE, but his global impact came through work with the WHO, Europe and developing nations’ governments.

Before embarking on this hefty hardback, my prior knowledge of Brian Abel-Smith was sparse. I delved into my reference manager – sure I’d read some of his work – to find a chapter in a book first published before I was born. The latest generation of health economists could easily miss Abel-Smith’s work. Sheard’s book reveals some reasons why. He never participated in the Health Economists’ Study Group and dedicated much of his career to practical work with an international focus. He was reluctant to engage with the theory-heavy work by the likes of Tony Culyer, which helps explain why many MSc courses don’t include him.

Sheard starts out by describing the early years of a boy with whom most readers will have little in common. Born in 1926 to a Brigadier-General and distant relation to the royal family, Brian was surrounded by people who were already – or were soon to be – key players in politics and academia. Like Brian, Clement Attlee had attended Haileybury school and promoted several Old Haileyburians in his government. At Cambridge University – where Brian was taught by the likes of Joan Robinson – Labour minister Hugh Dalton was trying to recruit promising students. He invited Brian for supper in 1951. Brian’s privilege is suitably framed and is not likely to alienate the reader, but the torrent of name-dropping might. It is difficult to keep up with so many acquaintances, and difficult to care. Though we at least observe Brian’s adept social skills.

It was charm (coupled with good connections) that enabled Brian to meet the father of social policy, Richard Titmuss. Theirs was to be a long and fruitful professional relationship and friendship, and the basis of Brian’s commitment to the LSE. The Beveridge Report was published when Brian was 16, and readers will find its principles reverberating through his life. Brian was dedicated to the NHS, and his first major research project involved costing the health service. His findings informed the 1956 Guillebaud Report, which concluded that the NHS was pretty good value for money. As Brian made quick progress in his academic career, he prudently maintained relationships with the political world.

It was Brian’s political writing that really got him noticed; his first publication was a pamphlet for the Fabian Society. Despite their incongruence, Brian handled the two worlds of politics and academia masterfully. Sheard likewise gives each their due attention in the retelling. The book is particularly enjoyable when it recounts episodes where Brian’s academic integrity shines through; possibly to the detriment of his political ties and socialist credentials. He regularly criticised Labour policy and shocked colleagues like Julian Tudor Hart when he wrote in support of competition, consumer choice and user fees. I rarely traverse political history as I find it pretty dull, but in staging this history as a backdrop to Brian’s life, Sheard was able to keep me engaged. My limited knowledge of the academic and political history of social policy in Britain left me with much to learn; better informed (or older) readers might not gain so much from the revision.

Brian’s interests extended beyond the ivory tower and beyond Westminster, and so he took roles in hospital management and governance. His work formed part of the basis for the formation of the Child Poverty Action Group, to which he dedicated a lot of time. He also had an entrepreneurial side, setting up a successful men’s clothing business, Just Men. His work is not shown to be of special relevance to the study of health economics, but rather to health and social policy more generally. Seasoned observers might not be surprised to read many parallels between the debates of Brian’s time and those currently storming on Twitter.

For me, the biography does not quite live up to its title. Abel-Smith is presented as many things – conscientious, charming, virtuous, humble, loyal – but his passion does not shine through. The book is written in a matter-of-fact style, and the fact of the matter seems to be that Brian was not particularly demonstrative. But a historical account – more a biography of global health policy than of Brian Abel-Smith – might be fitting. Brian’s life is a history of global health policy. His career tracks international developments and the book will be a treasure trove for historians.

In The Passionate Economist, Sheard has produced a valuable overview of the history of global health policy that many young health economists (like myself) might lack. Part of the joy in reading a biography – for me, at least – is identifying those tantalising gaps in the evidence, which require or encourage the author to use their knowledge of the subject to suggest what might have been. The Passionate Economist contains little of this and Sheard seems to struggle to get under the skin of her subject. But maybe that’s the point; Brian’s passion is veiled by his self-effacing nature. His impact on social policy and health services, both in the UK and internationally, was prodigious. And yet many health economists have never heard of him. There is wisdom in this.

Review: Thrive (Richard Layard, David Clark)

Thrive: The Power of Evidence-Based Psychological Therapies

Hardcover, 384 pages, ISBN: 9781846146053, published 3 July 2014

Amazon / Google Books / Allen Lane

Mental illness reduces national income by about 4%, and yet we only spend about 13% of our health budget and about 5% of our medical research funds on tackling the problem.

As an economist who writes a fair bit on mental health, I regularly trot out statements like this about how costly mental health problems are to society and how the under-provision of services is grossly inefficient. To some the point may now seem obvious and trite. As evidence grows ever more compelling, government policy slowly shifts in response. One success story is the Improving Access to Psychological Therapies (IAPT) initiative, which has greatly improved the availability of evidence-based treatment for some of the most prevalent mental health problems in the UK. Yet in many cases we still await adequate action from the government and decision-makers. Two key players in getting IAPT into government policy were Richard Layard – an economist – and David Clark – a psychologist. In their new book Thrive: The Power of Evidence-Based Psychological Therapies, Layard and Clark demonstrate the need for wider provision of cost-effective mental health care in the UK.

The book starts with a gentle introduction to mental illness; what it is, who suffers, the nature of treatment. This will give any reader a way in, with an engaging set-up for what follows (though with one third of families including someone with a mental illness, most people will find the topic relatable). The opening chapters go on to dig deeper into these questions; do these people get help, how does it affect their lives and what are the societal impacts? These chapters serve as a crash course in mental health and though the style is conversational and easily followed, on reflection you’ll realise that you’ve absorbed a great deal of information about mental health. More importantly, you’ll have a deeper understanding. This isn’t simply because of the number of statistics that have been thrown at you, but because of the personal stories and illustrations that accompany the numbers. This forms the first half of the book – ‘The Problem’ – which encourages the reader to start questioning why more isn’t being done. Economists may at times balk at the broad brush strokes in considering the societal ‘costs’ of mental health problems, but the figures are nevertheless startling.

From there the book continues to build. In the second half – ‘What Can Be Done?’ – the authors go on to explain that actually there’s a ton of effective therapies available. We know what they are and who they work for, but they aren’t available. There’s no doubt that the view of the evidence presented is an optimistic one, but it isn’t designed to mislead; where evidence is lacking, the authors say so. The book seems to be written with the sceptical academic in mind; no sooner can you start to question a claim than you are thrown another baffling statistic to chew on. Various therapies are explored, though the focus is undeniably on depression and anxiety and on cognitive behavioural therapy (CBT). Readers with CBT bugbears may feel alienated by this, but should consider it within the broader scope of the book.

Readers would do well to stop after chapter 14. Things go sharply downhill from this point and could, for some readers, undermine what goes before. This would be a great shame. In all seriousness, chapters 15 and 16 would be better off read at a later date, once the rest of the book has been absorbed, understood and – possibly – acted upon. In the final chapters Layard and Clark make distinctly political proposals about how society should be organised. The happiness agenda takes centre stage. In places, mental illness is presented as simply the opposite of happiness. This is an unfortunate and unnecessary tangent. I have some sympathies with the happiness agenda, but for many I expect these chapters would ruin the book. The less said about them the better.

It is a scandal that so many people with mental health problems do not have access to the cost-effective treatments that exist. Layard and Clark demonstrate convincingly that the issue is of public interest. Thrive has the potential to instill in people the right amounts of sympathy, anger and understanding to bring about change. Many will disagree with their prescriptions, but this should not detract from the central message of the book.

DOI: 10.6084/m9.figshare.1287738