The Introduction to Health Economics short course is concerned with behaviour, and how it relates to the production and consumption of health and healthcare. Health economics is different from other fields in economics, because of idiosyncrasies related to health and healthcare. For example, individuals can invest in their health through better diets and exercise, or disinvest through risky behaviours, such as smoking. This gives rise to efforts to influence healthy behaviours amongst individuals. However, individuals rely on experts – medical professionals – whose behaviour is likely influenced by incentives, which may include pay or concerns over legal action. This gives rise to agency problems that deserve scrutiny.
Furthermore, access to healthcare and the quality of that healthcare is affected by both time and the price of healthcare, both of which are rarely known beforehand, while the price might be covered by a third party, such as an insurance firm or national government. Therefore, neither patients nor healthcare service ‘firms’ entirely incorporate the costs of services, which may lead to a mismatch between the care that is required and the care that is offered. When combined, we see that healthcare costs rise faster than the rate of inflation. We will examine these aspects of health economics and more.