Author:

Abstract

Some of you may have taken a course in economics. For the first part of my talk, I am going to try to explain some economics terms, such as elasticity. In this case, we are going to be talking about the cross-country elasticity of health expenditures, with respect to the Gross Domestic Product (GDP). I will give you a review when I get there; it is really just economic jargon. Then, I am going to go through a set of literature, to try to explain the relationship between economic growth and health care spending across countries. This is a new line of thought that is internationally argued. The old story would be to develop a country first, and then spend resources on health. Health spending was something you wanted to postpone, something not really necessary for development. The new line of thinking is that, if you really want to successfully develop a country economically, you have to initially spend a fair amount of money on health care in the development process. This is a very important change of mindset, and I will talk a little about the mechanism by which health and health care leads to economic growth, which is centered on the development of human capital, a term that refers to education, training, and health.

Lastly, I will ask the question: "are we spending too much, too little, or the right amount on health?" On this one simple question, I am going to ask for you to vote to determine the right answer. You often read in the newspaper that health care costs too much, or that we are spending too much on it. The question is, are we really spending too much? How is that determined? The only way an economist knows how to determine that is to ask the people whose money is being spent, the consumers. However, an economist will not truly answer the question, because economists do not answer any questions, they just offer tradeoffs. The questions get answered by someone else, usually the participants in markets, and sometimes by a political leader, or through voting. In the end, we will go through a simple experiment to see what you think-if we should spend more or less, or whether we are spending the right amount.

Full Article [PDF]

[Back To Top]