Impossibility theorems in health economics

Sažetak. Kolektivno odlučivanje podložno je nemogućnosti agregiranja preferencija pojedinaca u društvenu funkciju blagostanja, nemogućnosti agregiranja ordinalnih preferencija u društvenu funkciju odlučivanja te nemogućnosti agregiranja preferencija prema međusobno neusporedivim kriterijima. Ovi problemi, za koje postoje formalni teoremi dokaza, mogu imati značajne posljedice za društvo na primjeru odlučivanja u javnom zdravstvu. Metodološka nemogućnost agregiranja preferencija dodatno je uvećana etičkim problemima, što se može vidjeti iz trenutnih primjera alokacije oskudnih cjepiva. Međutim, bez nekog oblika društvenog agregiranja preferencija ili nekog oblika odlučivanja, javni sektor, pa tako i javno zdravstvo ne može obavljati svoju djelatnost. U radu se ukazuje na neke od problema koji se javljaju zbog trenutnog načina alokacije.Abstract. Collective decision-making is subject to the impossibility of aggregating the preferences of individuals into a social welfare function, the impossibility of aggregating ordinal preferences into a social decision-making function, and the impossibility of aggregating preferences according to mutually incomparable criteria. These problems, for which there are formal theorems of evidence, could have significant consequences for society as for example in case of public health decision-making. Ethical issues, as can be seen from current examples of scarce vaccine allocation, exacerbate the methodological impossibility of aggregating preferences. However, without some form of social aggregation of preferences, or social decision making rules, the public sector, and thus public health systems, cannot perform their activity. This paper will try to summarize some of the problems that arise due to the current way of allocating scarce goods in health care

Un-Vignetting vignettes: Optimal highway pricing in Croatia

In the art of photography, the phenomenon of vignetting means blurring of an image at its periphery compared to its centre. Vignettes are a form of road pricing independent of travel distance. Their usage in Croatia was recently rejected while in Europe, the number of countries using them, is increasing. The economic question of using vignettes as a primary source of revenue for the financing of Croatian highways was blurred by economically peripheral but politically sensitive welfare transfer issues. There has been no visible attempt to push the discussion back into the field of economics by using purely economic criteria such as: opportunity cost of usage, “sunk costs”, marginal costs, and total costs recovery. The paper aims at un-vignetting (un-blurring) the issue and re-focusing it towards economic arguments. The approach taken is a deductive-nomological argument based on opportunity costs of usage. The conclusion is straightforward: the vignettes are Pareto efficient since they make the society in general and the consumers in particular ultimately better off even after taking into account compensations. The opportunity costs of usage of congestion-free roads are zero. The optimal quantity-dependent price is then also zero. Since zero price does not recover costs, a differential pricing scheme needs to be put in place: one that does not depend on distance travelled

Un-Vignetting vignettes: Optimal highway pricing in Croatia

In the art of photography, the phenomenon of vignetting means blurring of an image at its periphery compared to its centre. Vignettes are a form of road pricing independent of travel distance. Their usage in Croatia was recently rejected while in Europe, the number of countries using them, is increasing. The economic question of using vignettes as a primary source of revenue for the financing of Croatian highways was blurred by economically peripheral but politically sensitive welfare transfer issues. There has been no visible attempt to push the discussion back into the field of economics by using purely economic criteria such as: opportunity cost of usage, “sunk costs”, marginal costs, and total costs recovery. The paper aims at un-vignetting (un-blurring) the issue and re-focusing it towards economic arguments. The approach taken is a deductive-nomological argument based on opportunity costs of usage. The conclusion is straightforward: the vignettes are Pareto efficient since they make the society in general and the consumers in particular ultimately better off even after taking into account compensations. The opportunity costs of usage of congestion-free roads are zero. The optimal quantity-dependent price is then also zero. Since zero price does not recover costs, a differential pricing scheme needs to be put in place: one that does not depend on distance travelled

Opportunity Cost Classification of Goods and Markets

Sixty years ago, Samuelson’s “Pure Theory of Public Expenditure” expounded the classification of goods, and Bain’s “Economies of Scale, Concentration and the Condition of Entry in Twenty Manufacturing Industries” expounded the structure-conduct-performance paradigm. To the present day, rivalry in- and excludability from consumption classify goods, and subadditivity and irreversibility in production classify market structure. Opportunity costs of production in the form of prospective sunk costs incentivise investment and production, and the sunk costs themselves induce subadditivities, specialization and convexity of the marginal rate of technical substitution. Opportunity costs in consumption are determined by the marginal costs of replacement. In light of the recent Nobel price award to Jean Tirole, we revisit some of the forgotten discussions and clarify some of the terminology under a more economic framework of opportunity costs

Incremental cost-effectiveness pharmacoeconomic assessment of hepatitis C virus therapy: an approach for less wealthy members of the common market

Aim To develop a new method of health-economic analysis based on a marginal approach. Methods We tested the research hypothesis that a detailed comparative a priori incremental cost-effectiveness analysis provides the necessary input for budget impact analysis about the proper order of introduction of new therapies, and thus maximizes the cost-effectiveness bounded by the total budget constraint. For the analysis we chose a combination therapy for the treatment of hepatitis C virus (HCV) genotype 1 (GT1) infection, which was approved by the European Medicine Agency in 2015. We used the incremental cost-effective approach to assess the increase in the percentage of patients achieving sustained virological response (SVR) and the expenditure per additional SVR modulated by the new therapy’s market entrance dynamics. Patient subpopulations were differentiated by their response to previous treatment, presence of cirrhosis, and HCV GT1 subtype. Final parameters were estimated by Monte Carlo simulations. Results The new combination therapy had high efficacy, shorter duration, and was better tolerated than alternative interventions. The research hypothesis was confirmed: gradual introduction of the new therapy on the market, based on a priori incremental cost-effectiveness analysis, would result in average increase in successfully treated patients by 20%-40%, while additional costs would approximately be between 8%-40%, ie, €21 000-52 000 per additional patient achieving SVR. Conclusion We showed the new combination therapy to be cost-effective for certain patient subpopulations, especially for experienced cirrhotic HCV GT1 patients. Results of the analysis are in agreement with the latest recommendations for HCV patients’ treatment in Croatia. This economic evaluation could serve as a starting point for negotiations between pharmaceutical industry and insurance companies

Reaction of Zagreb Stock Exchange CROBEX Index to macroeconomic announcements within a high frequency time interval

Svrha ovog rada je analizirati reakcije CROBEX indeksa Zagrebačke burze na odabrane makroekonomske najave u vrlo kratkim vremenskim intervalima. U radu se koriste varijable stopa prinosa od 5 minuta od rujna 2017. do ožujka 2018. kao i 25 makroekonomskih najava. Nakon pažljive provedbe faze pripreme podataka, utvrđena je regresija za koju se koriste dummy varijable koje predstavljaju točno vrijeme objavljivanja. U obzir je uzeta heteroskedastičnost i autokorelacijske konzistentne (HAC) procjene zbog specifičnosti unutardnevnih podataka i robusnosti rezultata. Naši rezultati upućuju na to da su za unutardnevna kratka razdoblja reakcije tržišta statistički značajne. Stoga se zaključuje da se makroekonomska politika (monetarna ili fiskalna) odražava na stope prinosa hrvatskih dioničkih indeksa. Navedeno potvrđuje hipotezu učinkovitog tržišta i u skladu su sa zaključcima sličnih studija razvijenih gospodarstava.The purpose of this study is to analyse Zagreb Stock Exchange CROBEX Index reactions to selected macroeconomic announcements within ultra-short time intervals. We utilize 5-minute rates of returns from September 2017 to March 2018 and 25 macroeconomic announcements. After carefully arranging the data, we ran the regression with dummy variables capturing the exact announcement times. We used heteroscedasticity and autocorrelation consistent (HAC) estimations in order to account for specific characteristics of intraday data and to retain the robustness of the results. Our results indicate that, for short intraday periods, some reactions are statistically significant, but the majority stays insignificant. These conclusions support the semi-strong form of the efficient-market hypothesis and are in line with inferences of similar studies of advanced economies

Marine Pollution Differentiation with Stable Isotopes of Groundwater

Stock and flow pollution differentiation is the basis for efficient pollution-abatement mechanism designs. The focus of our research has been marine pollution from land-based sources. Stable isotope analysis of groundwater is an acknowledged method for karst aquifer characterisation. We have tested whether stable isotopes of water, when used as a proxy for groundwater dynamics in the karst, could also be used as an indicator of marine pollution differentiation in terms of flow and stock pollution. The focus has been on two close coastal locations characterized by differences in terms of open and closed sea as well as anthropogenic pressure. A static Estimated General Least Squares (EGLS) statistical model described the closed bay location suggesting stock pollution. For a good description of the open sea location, we have had to resort to dynamic Generalised Method of Moments (GMM) statistical modelling, indicating flow pollution. Stable isotopes of groundwater together with appropriate statistical tools have proved to be a useful tool of marine pollution differentiation into stock or flow

Marine Pollution Differentiation with Stable Isotopes of Groundwater

Stock and flow pollution differentiation is the basis for efficient pollution-abatement mechanism designs. The focus of our research has been marine pollution from land-based sources. Stable isotope analysis of groundwater is an acknowledged method for karst aquifer characterisation. We have tested whether stable isotopes of water, when used as a proxy for groundwater dynamics in the karst, could also be used as an indicator of marine pollution differentiation in terms of flow and stock pollution. The focus has been on two close coastal locations characterized by differences in terms of open and closed sea as well as anthropogenic pressure. A static Estimated General Least Squares (EGLS) statistical model described the closed bay location suggesting stock pollution. For a good description of the open sea location, we have had to resort to dynamic Generalised Method of Moments (GMM) statistical modelling, indicating flow pollution. Stable isotopes of groundwater together with appropriate statistical tools have proved to be a useful tool of marine pollution differentiation into stock or flow

Marine Pollution Differentiation with Stable Isotopes of Groundwater

Stock and flow pollution differentiation is the basis for efficient pollution-abatement mechanism designs. The focus of our research has been marine pollution from land-based sources. Stable isotope analysis of groundwater is an acknowledged method for karst aquifer characterisation. We have tested whether stable isotopes of water, when used as a proxy for groundwater dynamics in the karst, could also be used as an indicator of marine pollution differentiation in terms of flow and stock pollution. The focus has been on two close coastal locations characterized by differences in terms of open and closed sea as well as anthropogenic pressure. A static Estimated General Least Squares (EGLS) statistical model described the closed bay location suggesting stock pollution. For a good description of the open sea location, we have had to resort to dynamic Generalised Method of Moments (GMM) statistical modelling, indicating flow pollution. Stable isotopes of groundwater together with appropriate statistical tools have proved to be a useful tool of marine pollution differentiation into stock or flow

Marine Pollution Differentiation with Stable Isotopes of Groundwater

Stock and flow pollution differentiation is the basis for efficient pollution-abatement mechanism designs. The focus of our research has been marine pollution from land-based sources. Stable isotope analysis of groundwater is an acknowledged method for karst aquifer characterisation. We have tested whether stable isotopes of water, when used as a proxy for groundwater dynamics in the karst, could also be used as an indicator of marine pollution differentiation in terms of flow and stock pollution. The focus has been on two close coastal locations characterized by differences in terms of open and closed sea as well as anthropogenic pressure. A static Estimated General Least Squares (EGLS) statistical model described the closed bay location suggesting stock pollution. For a good description of the open sea location, we have had to resort to dynamic Generalised Method of Moments (GMM) statistical modelling, indicating flow pollution. Stable isotopes of groundwater together with appropriate statistical tools have proved to be a useful tool of marine pollution differentiation into stock or flow