Category Archives: Health

Health Status and Income Inequality

This version was revised in March 2006.

Keywords: Distributional Economics; Health;

Introduction and Summary

This paper brings together some recent research about the relationship between health status and income inequality. It focuses upon a set of propositions which challenge the conventional wisdom. They are:

1. That in a rich country poverty – low material standard of living – probably does not directly impact on health, but does indirectly through stress which income differences generate.

2. The increase in household inequality in the period of the late 1980s and early 1990s was more due to changes in tax, benefit, and government spending policies than it was due to market liberalisation. However, the market liberalisation increased stress on New Zealanders.

3. There is some evidence that income inequality may be increasing, due to factors such as globalisation and technological change.

4. The most common poor New Zealand household is a couple with children who are of Pakeha ethnicity, who own their home (usually with a mortgage), and who depend upon wages for their main income. There are other groups who have higher incidence of poverty, but because they are smaller they do not involve as many people. This means that effective poverty eradication involves working on a broad front rather than targeting minority groups.

5. Illness does not correlate well with income, unless age is controlled for. The sick in New Zealand are the elderly, although the paper goes on to argue that policies aiming to reduce poor health in the long term need to target those with low incomes and low in the socioeconomic status hierarchy.

Alcohol – Socioeconomic Impacts (including Externalities)

Draft for “The Encyclopedia of Public Health”

Keywords: Health; Regulation & Taxation;

Depending on the cultural context and particular circumstances, the same drink of alcohol can generate a feeling of benign prosperity, or moroseness, or stupor. The immediate health benefits for the individual may also be benign (or even beneficial), or the drink may result in injury or death – in the short run from accident or in the long run from one of the diseases alcohol can precipitate. The consequences for others may also be benign or beneficial, or damaging or mortal from violence or collateral accident. Someone may be born as the result of intentional or unintentional impregnation. The loss of production due to poorer workplace productivity or non-attendance from drinking alcohol may cause financial loss to the drinker and possibly to others. Among the many sectors of the economy alcohol may, or may not, especially generate additional costs in the criminal system, in the health system, and in the transport system. The national budget probably gains from the specific tax it levies on alcoholic beverages, but these levies may, or may not, cover its costs from the consumption of alcohol.

New Zealand’s Pharmaceutical Policies: a Fresh Look

This report, commissioned by Pharmac, reviews the report by Castalia Strategic Advisers New Zealand Pharmaceutical Policies: Time to Take a Fresh Look.   Keywords: Health;   INTRODUCTION   In August 2005, Castalia Strategic Advisers, published a report New Zealand Pharmaceutical Policies: Time to Take a Fresh Look. The report was commissioned by Pfizer New Zealand…
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Heart Gains: David Hay, Pioneer Cardiac Physician

Listener: 24 September, 2005.

Keywords: Health;

Although we think of lung cancer as the disease of tobacco, the weed is associated with other cancers, with respiratory disease (such as emphysema), and with heart and circulation conditions (cardiovascular disease). Not only do the chemicals in tobacco smoke trigger mutations within cells that lead to cancer, and damage the lungs, but they also stiffen the walls of the blood vessels. That requires the heart to work harder, so smokers are more prone to coronary heart disease (CHD) and stroke. Stopping smoking is the best way of preventing heart disease.

Further Developments in Estimating the Social Costs Of Substance Abuse


The views in this report on the Avoidable Costs of Substance Abuse Workshop (Ottawa June 21-22) are my own and do not reflect those of the others involved. It focusses on issues particularly pertinent to New Zealand. The paper was presented to a seminar of officials on 7 August, 2005. Comments Welcome [1]

Keywords: Health;


This report is on The Avoidable Costs Workshop held in Ottawa, Canada June 21-22, under the sponsorship of the Office of Research and Surveillance, Health Canada (Bureu de la rechercher and de la surveillance, Sante Canada).

Developing International Guidelines for Estimating Avoidable Costs

By David Collins and Helen Lapsley: Remarks on the Draft

Workshop on Guidelines for Estimating the Avoidable Costs of Substance Use and Abuse, sponsored by Health Canada, June 22-23, 2005, Ottawa.

Keywords: Health;

Thankyou for the invitation to attend what is proving to be a very interesting seminar in, if I may so, a pleasing and attractive city. As one would expect, David Collins and Helen Lapsley have contributed a valuable paper, albeit as they insist, a preliminary draft.

Globalisation and the Public Health

For Annual Conference of the Royal Australasian College of Physicians, 10 May 2005.

Keywords: Globalisation & Trade; Health;


The Royal Society of New Zealand has awarded me a grant from the Marsden Fund to study globalisation. The ultimate output will be a book. Today I want to set out the economists’ framework for thinking about globalisation, and to use it to consider the problem of alcohol control and the interaction between countries.

The Gains from Reducing Waiting Times

Paper to the Wellington Health Economist’s Group, 21 April 2005.

Keywords: Health;


This paper demonstrates that there can be substantial health benefits – as valued by economists – from reducing waiting times, far more than from the single earlier treatment necessary to get the reduction underway. For while the individual benefits from the treatment, all those that follow her or him also benefit from earlier treatment even though no additional resources are necessary.

Medical Misadventures: Should Patients Be Compensated for Managerial Failure?

Listener: 26 February, 2005.

Keywords: Health; Social Policy;

An earlier column Accidents Will Happen (April 17, 2004) commended the proposed change in the ACC compensation criteria from medical error (which involves fault) and medical mishap (with a rare and severe outcome) to the situation where unexpected treatment injury occurs. The column worried that the opportunities the new scheme promises for prevention might be overlooked. I gather the ACC is instituting a programme to improve the medical safety cultures of health professionals. Great. As the column concluded, the biggest gains from the reform may be that there will be less medical misadventure.

Taxing Alcoholic Beverages in New Zealand

Revised Version of Paper for “Thinking Drinking: Achieving Cultural Change by 2020″, Melbourne, 21-23 February, 2005.

Keywords: Health; Regulation & Taxation;

I thought a useful contribution would be to describe the recent history of alcohol taxation in New Zealand, explaining the principles underlying the changes and discussing some unresolved issues.

Compensating for Waiting Time Failures

Submission to the Select Committee on Health In Regard to the Injury Prevention, Rehabilitation, and Compensation Amendment Bill (2004, No 3) by Brian Easton and Alan Gray.

Keywords: Health; Social Policy;

Summary of Submission

We support the general approach of the Bill to remove the notion of fault in medical misadventure and to extend rehabilitation and compensation to all those who suffer treatment injury. However, we do not believe there should be any exemption for treatment injury as a result of resource shortages. This is inconsistent with the Bill’s general principles.<

The Gains from Reducing Waiting Times

There is an accompanying letter A Strategy for Dealing with Excessive Waiting Times.

Keywords: Health;

This note has a simple purpose: to demonstrate the gains from reducing waiting times are somewhat larger than they might at first seem: an economic evaluation of the benefits reducing waiting times is likely to suggest there are very high returns. Essentially this arises because while a shortening of waiting times may appear superficially to benefit just a few people – the numbers in the backlog which are treated – all the subsequent patients are benefited by the shortening of the waiting times. Thus there is a spectacular multiplier from reducing waiting times which makes the gains for the outlay to reduce the backlog far larger than they at first seem.

Culture Matters

Don Brash says, “I can’t think of anything in health which is specifically Maori.” So why treat Maori differently?

Listener: 20 March, 2004.

Keywords: Health; Maori;

Sadly, the proportion of Maori who smoke, and as a consequence suffer the diseases from smoking and die early, is higher than that of Pakeha. Moreover, although there has been some success from the campaign to reduce smoking, it seems to have had little impact on Maori rates. So it makes sense to have a specifically Maori anti-smoking campaign, administered by Maori. One of its successes has been that most marae now ban smoking. No Pakeha-dominated organisation could have achieved such an outcome.

Report on the Social Costs Of Alcohol Abuse Workshop:

Université de Neuchâtel, Suisse, October 24-25th, 2003.

Keywords: Health;

The conference was centred around the launching of a study commissioned by the Swiss Federal Office of Public Health to assess the costs in Switzerland of alcohol misuse, prepared by a team from the Economics Department of the Université de Neuchâtel, led by Professor Claude Jeanrenaud. Additionally, a number of international experts were invited to give papers on broader issues. The report International Guidelines for Estimating the Costs of Substance Abuse (2ed), written by some of these experts and just published by the World Health Organisation was, in effect, also launched. This report highlights and reflects upon some of the papers presented at the conference.

The Economic Regulation Of Alcohol Consumption in New Zealand

Conference on ‘The Social Cost of Alcohol Abuse’, IRER – University of Neuchatel, Switzerland, 24-25 October, 2003

Keywords: Health;


While New Zealand has some measurement of the social costs of alcohol misuse, which the paper reports, the interest in the country, and this paper, has been the shift to implementing policies whose focus is to minimise harm from misuse.

The paper traverses the policy environment from the initial revenue-raising role of the excise duty in 1840. As the frontier society moved to a settled society, policy from the 1890s moved to restricting the consumption of alcohol, with revenue remaining the main fiscal concern. However, in 1989 a new direction was undertaken in which aimed to minimise restrictions on low and zero harm alcohol consumption, and eliminate as far as was practical harm arising from misuse. Over the next 14 years various measures were taken culminating in the latest tax package of May 2003.

The paper traces through these changes. It argues that the policy transformation is not complete, and also discusses some of the inherent tensions in the new approach. In particular the shift from restriction to a liberal regime which treated liquor as a largely normal consumption good, with targeting on harm minimisation, resulted in easing of prohibitions on advertising of liquor.

But the paper also discusses the limitations of the economic approach, for it is not possible to use the policy instruments to target precisely on harm reduction without also limiting some low and zero harm consumption. This emphasises the need for non-economic policy instruments, most pertinently those which change attitudes to alcohol consumption where there remains a ‘frontier’ spirit.

The Analysis Of Costs and Benefits Of Gambling

‘It is a capital mistake to theorise before one has data’ Sherlock Holmes.

Keywords: Health;


There as been various calls for a ‘cost benefit analysis’ of gambling in New Zealand. The expression ‘cost-benefit analysis’ (CBA) has a rigorous meaning in economics, and while there is no need for economics to insist that their meaning of the terms should be universally applied, it is helpful to recognise that the phrase is being used as a short hand for ‘an analysis of the costs and benefits’. Thus the CBA ends up with a single number – a total quantum of which summarises all the costs and benefits in an economy. But even were that quantum zero – so the costs and benefits netted out – there would still be considerable interest in the individual costs and benefits and their incidence. So until there is a consensus to the contrary, I propose to interpret the expression ‘cost benefit analysis’ to be synonymous with ‘the analysis of costs and benefits’ rather than economist’s technical term which in this text I shall refer to as ‘CBA’. I use the expression ‘cost benefit analysis’ to denote both.

Well-health and the Future Of the Pharmacist

Paper to the Unichem-Life Pharmacy Conference, Rotorua, 31 August 2003.

Keywords: Health;

You might expect an economist to focus on the state of public spending on health. Certainly were I the minister of finance I would. Indeed in a recent speech Michael Cullen expressed some dismay because since 1996 we have been increasing health spending faster than GDP and yet the problem of inadequate health funding appears unresolved.