EFN423 Health Economics: Applications and Policy Assignment

Question 1              (400 words, 10 points)

In March 2020, many countries around the world, including Australia, were facing a significant crisis over the stockpile of Personal Protective Equipment (PPE). In the US, hospitals were shutting their doors  due to lack of PPE, and the community was exhorted to sew cloth masks for health workers, who were resorting to home-made PPE. As the epidemic hit the US and catastrophic PPE shortages unfolded, the US Centre for Disease Control downgraded their recommendations to surgical masks, saying bandanas can substitute for a mask as a last resort. The situation was not as dire, but quite concerning in some states of Australia. (Note: underlined words are hyperlinks to online sources).

1. a) (4 points): Why do you think was the economic reason for the PPE shortage in Australia in the first part of 2020? Illustrate using an appropriate diagram.
2. b) (6 points):You all remember the panic buying of toilet paper rolls, face masks, and hand-sanitiser bottles during the heat of the COVID-19 pandemic. Would you support a ban on price increase or allow private sellers to charge high prices for these products in a pandemic situation? Discuss the costs and benefits of allowing private sellers to charge high prices for PPE items?

Question 2               (400 words, 10 points)

As of mid-March, 2022, the COVID-19 pandemic has claimed more than 6 million lives across the world. Mass vaccination against the SARS-CoV-2 is the only way to protect against severe consequences to the population health. However, a part of the global population is skeptical about the efficacy about currently available vaccines.

1. a) (5 points):Given the spread and the lethality of the disease and the vaccine hesitancyamong many, would you support a compulsory vaccination in Australia for a similar future pandemic? Explain your rationale from a health economics perspective.
2. b) (2 points):As of mid-March, 2021, there are many COVID-19 vaccines that were developed by private vaccine manufacturers such as, Pfizer-BioNtech, Moderna, Oxford-AstraZeneca, etc. Cost of research and development to develop a vaccine is very high and typically a big part of these costs is borne by the vaccine manufacturers. If vaccines were available in a free market (i.e., with no government intervention), would the supply curve of the vaccine be price elastic or price inelastic? Explain why. What about the demand curve? Explain why.
3. c) (3 points):Argue why the government should or should not provide subsidy for vaccine production. Identify, using a well-labelled diagram, the changes to the equilibrium price and quantity and comment on the distribution of the benefit from subsidy between the buyers and sellers if the government subsidises vaccine production.

Question 3       (800 words, 20 points)

For the third consecutive years life expectancy at birth in the U.S. declined again in 2019. This is a dismal trend not seen since World War I. See: https://jamanetwork.com/journals/jama/fullarticle/2756187?guestAccessKey=c1202c42-e6b9-4c99-a936-0976a270551f&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=112619 

1. a) (10 points):Discuss the characteristics of the broad socio-economic disparities in life-expectancy observed in this report and elsewhere.
2. b) (10 points):Do you think stress due to socio-economic inequality has contributed to this unnatural trend? Explain and illustrate with research evidence.

Question 4          (400 words, 10 points)

The following is an excerpt from the abstract of a recent journal article entitled “The Effects of Maternal Fasting during Ramadan on Birth and Adult Outcomes” by Almond and

Mazumder (2007). Ramadan is the traditional month of daytime fasting by Muslims:

“We use the Islamic holy month of Ramadan as a natural experiment for evaluating the short and long-term effects of fasting during pregnancy. Using Michigan natality data we show that in utero exposure to Ramadan among Arab births results in lower birthweight and reduced gestation length. Preconception exposure to Ramadan is also associated with fewer male births. Using Census data in Uganda we also find that Muslims who were born nine months after Ramadan are 22 percent (p = 0.02) more likely to be disabled as adults. Effects are found for vision, hearing, and especially for mental (or learning) disabilities.” (Here is the link to the full article, if you are interested)

1. (4 points): Describe how one or more theories discussed in class might explain the findings by the authors.
2. (6 points): Suppose that another scientific study determines that fasting during Ramadan actually has no causal effect on foetalhealth and concludes some other factors may have influenced the Michigan results. What ‘other' factor(s) could explain the Michigan results? Provide an argument (preferably with evidence) to establish the validity of your explanation.

Question 5  (400 words, 10 points)

1. a)(5 points):Patients failing to appear for medical appointments and adhering to medical treatment regimens. This patient behaviour is a serious issue in the public health system as non-adherence contributes to significant wastage of resources. Discuss two separate examples from the literature that highlight a nudge approach to address this problem of non-adherence.
2. b)(5 points):People tend to respond differently to a health risk presented as 80% chance of survival as opposed to 20% chance of death. Discuss the significance of this human trait in improving the impact of health communication.