# Sam Watson’s journal round-up for 12th February 2018

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.

Tuskegee and the health of black men. The Quarterly Journal of Economics [RePEc] Published February 2018

In 1932, a study often considered the most infamous and potentially most unethical in U.S. medical history began. Researchers in Alabama enrolled impoverished black men in a research program designed to examine the effects of syphilis under the guise of receiving government-funded health care. The study was known as the Tuskegee syphilis experiment. For 40 years the research subjects were not informed they had syphilis nor were they treated, even after penicillin was shown to be effective. The study was terminated in 1972 after its details were leaked to the press; numerous men died, 40 wives contracted syphilis, and a number of children were born with congenital syphilis. It is no surprise then that there is distrust among African Americans in the medical system. The aim of this article is to examine whether the distrust engendered by the Tuskegee study could have contributed to the significant differences in health outcomes between black males and other groups. To derive a causal estimate the study makes use of a number of differences: black vs non-black, for obvious reasons; male vs female, since the study targeted males, and also since women were more likely to have had contact with and hence higher trust in the medical system; before vs after; and geographic differences, since proximity to the location of the study may be informative about trust in the local health care facilities. A wide variety of further checks reinforce the conclusions that the study led to a reduction in health care utilisation among black men of around 20%. The effect is particularly pronounced in those with low education and income. Beyond elucidating the indirect harms caused by this most heinous of studies, it illustrates the importance of trust in mediating the effectiveness of public institutions. Poor reputations caused by negligence and malpractice can spread far and wide – the mid-Staffordshire hospital scandal may be just such an example.

The economic consequences of hospital admissions. American Economic Review [RePEcPublished February 2018

Is health care infected by Baumol’s cost disease? Test of a new model. Health Economics [PubMed] [RePEcPublished 9th February 2018

A few years ago we discussed Baumol’s theory of the ‘cost disease’ and an empirical study trying to identify it. In brief, the theory supposes that spending on health care (and other labour-intensive or creative industries) as a proportion of GDP increases, at least in part, because these sectors experience the least productivity growth. Productivity increases the fastest in sectors like manufacturing and remuneration increases as a result. However, this would lead to wages in the most productive sectors outstripping those in the ‘stagnant’ sectors. For example, salaries for doctors would end up being less than those for low-skilled factory work. Wages, therefore, increase in the stagnant sectors despite a lack of productivity growth. The consequence of all this is that as GDP grows, the proportion spent on stagnant sectors increases, but importantly the absolute amount spent on the productive sectors does not decrease. The share of the pie gets bigger but the pie is growing at least as fast, as it were. To test this, this article starts with a theoretic two-sector model to develop some testable predictions. In particular, the authors posit that the cost disease implies: (i) productivity is related to the share of labour in the health sector, and (ii) productivity is related to the ratio of prices in the health and non-health sectors. Using data from 28 OECD countries between 1995 and 2016 as well as further data on US industry group, they find no evidence to support these predictions, nor others generated by their model. One reason for this could be that wages in the last ten years or more have not risen in line with productivity in manufacturing or other ‘productive’ sectors, or that productivity has indeed increased as fast as the rest of the economy in the health care sector. Indeed, we have discussed productivity growth in the health sector in England and Wales previously. The cost disease may well then not be a cause of rising health care costs – nevertheless, health care need is rising and we should still expect costs to rise concordantly.

Credits

# Method of the month: Synthetic control

Once a month we discuss a particular research method that may be of interest to people working in health economics. We’ll consider widely used key methodologies, as well as more novel approaches. Our reviews are not designed to be comprehensive but provide an introduction to the method, its underlying principles, some applied examples, and where to find out more. If you’d like to write a post for this series, get in touch. This month’s method is synthetic control.

## Principles

Health researchers are often interested in estimating the effect of a policy of change at the aggregate level. This might include a change in admissions policies at a particular hospital, or a new public health policy applied to a state or city. A common approach to inference in these settings is difference in differences (DiD) methods. Pre- and post-intervention outcomes in a treated unit are compared with outcomes in the same periods for a control unit. The aim is to estimate a counterfactual outcome for the treated unit in the post-intervention period. To do this, DiD assumes that the trend over time in the outcome is the same for both treated and control units.

It is often the case in practice that we have multiple possible control units and multiple time periods of data. To predict the post-intervention counterfactual outcomes, we can note that there are three sources of information: i) the outcomes in the treated unit prior to the intervention, ii) the behaviour of other time series predictive of that in the treated unit, including outcomes in similar but untreated units and exogenous predictors, and iii) prior knowledge of the effect of the intervention. The latter of these only really comes into play in Bayesian set-ups of this method. With longitudinal data we could just throw all this into a regression model and estimate the parameters. However, generally, this doesn’t allow for unobserved confounders to vary over time. The synthetic control method does.

## Implementation

Abadie, Diamond, and Haimueller motivate the synthetic control method using the following model:

$y_{it} = \delta_t + \theta_t Z_i + \lambda_t \mu_i + \epsilon_{it}$

where $y_{it}$ is the outcome for unit $i$ at time $t$, $\delta_t$ are common time effects, $Z_i$ are observed covariates with time-varying parameters $\theta_t$, $\lambda_t$ are unobserved common factors with $\mu_i$ as unobserved factor loadings, and $\epsilon_{it}$ is an error term. Abadie et al show in this paper that one can derive a set of weights for the outcomes of control units that can be used to estimate the post-intervention counterfactual outcomes in the treated unit. The weights are estimated as those that would minimise the distance between the outcome and covariates in the treated unit and the weighted outcomes and covariates in the control units. Kreif et al (2016) extended this idea to multiple treated units.

Inference is difficult in this framework. So to produce confidence intervals, ‘placebo’ methods are proposed. The essence of this is to re-estimate the models, but using a non-intervention point in time as the intervention date to determine the frequency with which differences of a given order of magnitude are observed.

Brodersen et al take a different approach to motivating these models. They begin with a structural time-series model, which is a form of state-space model:

$y_t = Z'_t \alpha_t + \epsilon_t$

$\alpha_{t+1} = T_t \alpha_t + R_t \eta_t$

where in this case, $y_t$ is the outcome at time $t$, $\alpha_t$ is the state vector and $Z_t$ is an output vector with $\epsilon_t$ as an error term. The second equation is the state equation that governs the evolution of the state vector over time where $T_t$ is a transition matrix, $R_t$ is a diffusion matrix, and $\eta_t$ is the system error.

From this setup, Brodersen et al expand the model to allow for control time series (e.g. $Z_t = X'_t \beta$), local linear time trends, seasonal components, and allowing for dynamic effects of covariates. In this sense the model is perhaps more flexible than that of Abadie et al. Not all of the large number of covariates may be necessary, so they propose a ‘slab and spike’ prior, which combines a point mass at zero with a weakly informative distribution over the non-zero values. This lets the data select the coefficients, as it were.

Inference in this framework is simpler than above. The posterior predictive distribution can be ‘simply’ estimated for the counterfactual time series to give posterior probabilities of differences of various magnitudes.

### Software

#### Stata

• Synth Implements the method of Abadie et al.

#### R

• Synth Implements the method of Abadie et al.
• CausalImpact Implements the method of Brodersen et al.

## Applications

Kreif et al (2016) estimate the effect of pay for performance schemes in hospitals in England and compare the synthetic control method to DiD. Pieters et al (2016) estimate the effects of democratic reform on under-five mortality. We previously covered this paper in a journal round-up and a subsequent post, for which we also used the Brodersen et al method described above. We recently featured a paper by Lépine et al (2017) in a discussion of user fees. The synthetic control method was used to estimate the impact that the removal of user fees had in various districts of Zambia on use of health care.

Credit

# Sam Watson’s journal round-up for 30th October 2017

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.

Conditional cash transfers: the case of Progresa/OportunidadesJournal of Economic Literature [RePEc] Published September 2017

The Progresa/Oportunidades programme was instigated in Mexico in 1995. The main innovation of the programme was a series of cash payments conditional on various human capital investments in children, such as regular school attendance and health check-ups. Beginning principally in rural areas, it expanded to urban areas in 2000-1. Excitingly for researchers, randomised implementation of the programme was built into its rollout, permitting evaluation of its effectiveness. Given it was the first such programme in a low- or middle-income country to do this, there has been a considerable amount of analysis and literature published on the topic. This article provides an in-depth review of this literature – incorporating over one hundred articles from economics and health journals. I’ll just focus on the health-related aspects of the review rather than education, labour market, or nutrition outcomes, but they’re also worth a look. The article provides a simple theoretical model about the effects of conditional cash transfers to start with and suggests that they have both a price effect, through reducing the shadow wage of time in activities other than those to which the payment is targeted, and an income effect, by increasing total income. The latter effect is ambiguous in its direction. For health, a large number of outcomes including child mortality and height, behavioural problems, obesity, and depression have all been assessed. For the most part  this has been through health modules applied to a subsample of people in surveys, which may limit the conclusions one can make for reasons such as attrition in the samples of treated and control households. Generally, the programme has demonstrated positive health effects (of varying magnitudes) in both the short and medium terms. Health care utilisation increased and with it there was a reduction in self-reported illness, behavioural problems, and obesity. However, positive effects are not reported universally. For example, one study reported an increase in child height in the short term, but in the medium term little change was reported in height-for-age z-scores in another study, which may suggest children catch-up in their growth. Nevertheless, it seems as though the programme succeeded in its aims, although there remains the question of its cost-benefit ratio and whether these ends could have been achieved more cost-effectively by other means. There is also the political question about the paternalism of the programme. While some political issues are covered, such as the perception of the programme as a vehicle for buying votes, and strategies for mitigating these issues, the issue of its acceptability to poor Mexicans is not well covered.

Health‐care quality and information failure: evidence from Nigeria. Health Economics [PubMedPublished 23rd October 2017

When we conceive of health care quality we often think of preventable harm to patients. Higher quality institutions make fewer errors such as incorrect diagnoses, mistakes with medication, or surgical gaffes. However, determining when an error has been made is difficult and quality is often poorly correlated with typical measures of performance like standardised mortality ratios. Evaluating quality is harder still in resource-poor settings where there are no routine data for evaluation and often an absence of patient records. Patients may also have less knowledge about what constitutes quality care. This may provide an environment for low-quality providers to remain in business as patients do not discriminate on the basis of quality. Patient satisfaction is another important aspect of quality, but not necessarily related to more ‘technical’ aspects of quality. For example, a patient may feel that they’ve not had to wait long and been treated respectfully even if they have been, unbeknownst to them, misdiagnosed and given the wrong medication. This article looks at data from Nigeria to examine whether measures of patient satisfaction are correlated with technical quality such as diagnostic accuracy and medicines availability. In brief, they report that there is little variation in patient satisfaction reports, which may be due to some reporting bias, and that diagnostic accuracy was correlated with satisfaction but other markers of quality were not. Importantly though, the measures of technical quality did little to explain the overall variation in patient satisfaction.

State intimate partner violence-related firearm laws and intimate partner homicide rates in the United States, 1991 to 2015. Annals of Internal Medicine [PubMedPublished 17th October 2017

Gun violence in the United States is a major health issue. Other major causes of death and injury attract significant financial investment and policy responses. However, the political nature of firearms in the US limit any such response. Indeed, a 1996 law passed by Congress forbade the CDC “to advocate or promote gun control”, which a succession of CDC directors has interpreted as meaning no federally funded research into gun violence at all. As such, for such a serious cause of death and disability, there is disproportionately little research. This article (not federally funded, of course) examines the impact of gun control legislation on inter-partner violence (IPV). Given the large proportion of inter-partner homicides (IPH) carried out with a gun, persons convicted of IPV felonies and, since 1996, misdemeanours are prohibited from possessing a firearm. However, there is variation in states about whether those convicted of an IPV crime have to surrender a weapon already in their possession. This article examines whether states that enacted ‘relinquishment’ laws that force IPV criminals to surrender their weapons reduced the rate of IPHs. They use state-level panel data and a negative binomial fixed effects model and find that relinquishment laws reduced the risk of IPHs by around 10% and firearm-related IPH by around 15%.

Credits