The net effects of medical malpractice tort reform on health insurance losses: the Texas experience

In this paper, we examine the influence of medical malpractice tort reform on the level of private health insurance company losses incurred. We employ a natural experiment framework centered on a series of tort reform measures enacted in Texas in 2003 that drastically altered the medical malpractice environment in the state. The results of a difference-in-differences analysis using a variety of comparison states, as well as a difference-in-difference-in-differences analysis, indicate that ameliorating medical malpractice risk has little effect on health insurance losses incurred by private health insurers

A contingent valuation study to estimate the parental willingness-to-pay for childhood diarrhoea and gender bias among rural households in India

We used contingent valuation technique to estimate the parental willingness to pay for an episode of diarrhoea among 324 children of both sexes aged between five and seven years in two rural villages of Chennai in India. The aim was to examine if there was any gender bias in the parental willingness to treat children for a diarrhoeal episode, and if so to what extent. The willingness to pay was specified as a hedonic function of the duration and severity of an episode, and of parents' socioeconomic characteristics. The findings suggest that parents were willing to pay more to protect their male child compared to the female child suffering from a diarrhoeal episode. The median willingness to pay to avoid an episode for male and female children were calculated at Rs. 33.7 (approx. US$0.72) and Rs. 25.2 (approx. US$ 0.54) respectively – a difference of around 34%. After adjusting for the greater duration and severity of the illness, it was found that the difference between the two medians increased to 51%

Measuring loss aversion under ambiguity: a method to make prospect theory completely observable

We propose a simple, parameter-free method that, for the first time, makes it possible to completely observe Tversky and Kahneman’s (1992) prospect theory. While methods exist to measure event weighting and the utility for gains and losses separately, there was no method to measure loss aversion under ambiguity. Our method allows this and thereby it can measure prospect theory’s entire utility function. Consequently, we can properly identify properties of utility and perform new tests of prospect theory. We implemented our method in an experiment and obtained support for prospect theory. Utility was concave for gains and convex for losses and there was substantial loss aversion. Both utility and loss aversion were the same for risk and ambiguity, as assumed by prospect theory, and sign-comonotonic trade-off consistency, the central condition of prospect theory, held

Time preferences and risk aversion: tests on domain differences

The design and evaluation of environmental policy requires the incorporation of time and risk elements as many environmental outcomes extend over long time periods and involve a large degree of uncertainty. Understanding how individuals discount and evaluate risks with respect to environmental outcomes is a prime component in designing effective environmental policy to address issues of environmental sustainability, such as climate change. Our objective in this study is to investigate whether subjects' time preferences and risk aversion across the monetary domain and the environmental domain differ. Crucially, our experimental design is incentivized: in the monetary domain, time preferences and risk aversion are elicited with real monetary payoffs, whereas in the environmental domain, we elicit time preferences and risk aversion using real (bee-friendly) plants. We find that subjects' time preferences are not significantly different across the monetary and environmental domains. In contrast, subjects' risk aversion is significantly different across the two domains. More specifically, subjects (men and women) exhibit a higher degree of risk aversion in the environmental domain relative to the monetary domain. Finally, we corroborate earlier results, which document that women are more risk averse than men in the monetary domain. We show this finding to, also, hold in the environmental domain

Uncertain future preferences and conservation

An important problem in environmental economics arises from te irreversibility of consuming or destroying certain resources. Extractive resources like oil are a clear example. Even for environmental resources the same seems to be true in a number of environmental cases, for example biodiversity, current climate conditions, or complex ecological systems. Irreversibility imposes a sever externality across different generations; future generations will suffer from the destruction of a unique asset like Amazonia, and it is not clear how such a loss could be compensated in terms of other goods. If such an asset is destroyed, then it is not possible to subsequently restore it. In contrast, if the asset is preserved, then it is possible to "use" the asset at a subsequent date. If there is uncertainty about future preferences or valuations, then preservation provides a type of insurance which is not available if the irreversible decision is carried out

Obstructed Labor and Caesarean Delivery: The Cost and Benefit of Surgical Intervention

Background: Although advances in the reduction of maternal mortality have been made, up to 273,000 women will die this year from obstetric etiologies. Obstructed labor (OL), most commonly treated with Caesarean delivery, has been identified as a major contributor to global maternal morbidity and mortality. We used economic and epidemiological modeling to estimate the cost per disability-adjusted life-year (DALY) averted and benefit-cost ratio of treating OL with Caesarean delivery for 49 countries identified as providing an insufficient number of Caesarean deliveries to meet demand. Methods and Findings Using publicly available data and explicit economic assumptions, we estimated that the cost per DALY (3,0,0) averted for providing Caesarean delivery for OL ranged widely, from $251 per DALY averted in Madagascar to$3,462 in Oman. The median cost per DALY averted was $304. Benefit-cost ratios also varied, from 0.6 in Zimbabwe to 69.9 in Gabon. The median benefit-cost ratio calculated was 6.0. The main limitation of this study is an assumption that lack of surgical capacity is the main factor responsible for DALYs from OL. Conclusions: Using the World Health Organization's cost-effectiveness standards, investing in Caesarean delivery can be considered “highly cost-effective” for 48 of the 49 countries included in this study. Furthermore, in 46 of the 49 included countries, the benefit-cost ratio was greater than 1.0, implying that investment in Caesarean delivery is a viable economic proposition. While Caesarean delivery alone is not sufficient for combating OL, it is necessary, cost-effective by WHO standards, and ultimately economically favorable in the vast majority of countries included in this study

Flood Proofing Low-Income Houses in India: an Application of Climate-Sensitive Probabilistic Benefit-Cost Analysis

Poor communities in high risk areas are disproportionately affected by disasters compared to their wealthy counterparts; yet, there are few analyses to guide public decisions on pro-poor investments in disaster risk reduction. This paper illustrates an application of benefit-cost analysis (BCA) for assessing investments in structural flood proofing of low-income, high-risk houses. The analysis takes account of climate change, which is increasingly viewed as an important consideration for assessing long-term investments. Specifically, the study focuses on the Rohini river basin of India and evaluates options for constructing non-permanent and permanent residential structures on a raised plinth to protect them against flooding. The estimates show a positive benefit-cost ratio for building new houses on a raised plinth, while the ratio is less than one for demolishing existing houses to rebuild on a raised plinth. Climate change is found to significantly affect the BCA results. From a policy perspective, the analysis demonstrates the potential economic returns of raised plinths for ‘building back better’ after disasters, or as a part of good housing design practice