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HEALTH
Comes from an English word heal
which connotes the totality or the wholeness of a person. Totality means the wholeness of a person such as his physical, mental, social, emotional, spiritual, and sexual aspects.
mental, and social well-being, not merely the absence of disease or infirmity. WHO defines health as both positive and negative. Negative definition this refers to the absence of disease or illness in ones body.
Elements of Health
1. Physical health - refers to the ability of the human body to function with vigor and alertness(i.e. head to foot) - ex. a regular exercise as one way of maintaining ones health.
2. Emotional health
- means the capability of an individual to express his own feelings and develop his personal relationship with others. - ex. how to get along with others.
3. Mental health - refers to the mental capacity of man in having positive outlook in ones life, like having perception of being healthy and continuing personal growth.
4. Social health - connotes the ability to show concern and support to other people at all times. - ex. constant communication with friends, family members, and other people in the community.
5. Spiritual health
- refers to an individuals capacity and ability to express his spiritual maturity and moral integrity. - we should respect the beliefs of others with regard to their respective religious practices.
6. Sexual health - refers to the capacity of an individual to accept his or her sexuality, including his or her sexual preference like being a male or female, gay or lesbian.
2 Atmospheres of Health
1. Environmental Health characterized
by ecological fitness such as air and water superiority, and housing kind and concreteness. 2. Societal Health characterized by the socio-economic condition of the people such as having improvements in housing facilities as well as convenience and security of people around the area.
ECONOMICS
The study of the proper allocation and
efficient use of scarce resources to produce commodities for the satisfaction of unlimited needs and wants.
BRANCHES OF ECONOMICS
Microeconomics examines the economic
behavior of a particular or individual components such as household, firm and individual owner of production with a view to understand decision-making in the face of scarcity and the consequences of these decisions.
of the economy in general or as a whole with a view to understand interactions between economics aggregates such as national income, employment, and inflation.
METHODOLOGIES OF ECONOMICS
Positive economics is an analysis of
economic behavior that uses economic theory and empirical analysis to explain what is or what happened. - it seeks to predict and explain economic phenomena and describes facts and data in the economy.
ethics and value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a goal. - It is concerned with what one believes ought to be. Hence, it deals with the appropriateness of an economic outcome or policy. It seeks to answer the question what ought to be?
EXAMPLES Positive : - In 2004, the countrys total health expenditure reached P165 billion, indicating an 11.2 percent increase from a 14-year high of 25.3 percent growth registered in 203 at a current price.
Normative :
- To regulate health care expenditure of the country, the Philippine government should implement the national health program similar to that of developed countries like USA, United Kingdom, and Canada.
and services should be produced and in what quantities? (ALLOCATIVE EFFICIENCY) 2. How should these medical and nonmedical goods and services be produced? (PRODUCTION EFFICIENCY) 3. For whom should these medical and non-medical goods and services be produced? (PROBLEM OF DISTRIBUTION)
on the surface of the earth that are used for the production of goods and services. (RENT) 2. Labor available physical and mental talents of the people who have to produce goods and services. (WAGE)
physical goods that a person creates in the expectation that its use will improve or increase future production(ex. machinery,tools,buildings, etc(INTEREST) Entrepreneur- combines the three factors of production; specialist form of labor input) (PROFIT) 4. Technology - the study, development, and application of devices, machines, and techniques for manufacturing and productive processes
HEALTH ECONOMICS
- refers to the study of proper allocation
and efficient utilization of health resources for the improvement of health where resources are limited and wants are potentially infinite.
allocation of all the health care resources which include medical supplies (i.e. syringe, gauze, and others); medical personnel (i.e. doctors, radiologists, nurses, OTs, PTs, etc.); capital inputs (i.e. blood banks, out-patient clinics, etc.)
in answering the three basic economic problems, what we need is the proper allocation and decision-making system to determine how much of which kind of health care is provided.
role in allocating health care resources. An economic system refers to a set of economic institution that dominates a given economy with the main objective of solving the basic economic problems and proper allocation of health care resources.
2. Command System - the factor of production, distribution, and allocation of health resources are owned and managed by the state. -decision in answering the basic economic problems and allocation of health care resources are planned, done, and dictated by the government. - there is a presence of central planning to allocate health care according to some predetermined criterion such as need.
3. Free Market System - would allocate health care resources according to consumers purchasing behavior. - hence, the price of medical goods and services dictates what health products will be produced, how and for whom it will be produced.
- this system solves the allocation of health care resources by conferring with the majority. - this means that an interaction occurs between the one who needs and the one who offers medical and non-medical goods and services in determining the price of a particular product.
4. Mixed System - combines parts of the command system with the elements of free market. - the problems of allocation and distribution of health resources are determined through a combination of the market system and government laws and policies.
B. Economic Efficiency
Economic Efficiency of resources occurs
when society is using scarce resources to produce the highest possible quantity of goods and services that consumers want to buy. Kinds: 1. Productive efficiency when using the least amount of health resources to produce certain health care at the lowest possible cost.
Productive efficiency implies that the health care sectors are using the least costly land, labor, capital and entrepreneur, the best available technology, and the best production processes.
2. Allocative Efficiency - a condition in which the optimal amount of output is produced given the underlying structure of social benefits and costs. - is manifested in health if there are no health resources being wasted.
Health Outcomes It is important to remember that economics seeks to maximize the output of any given input. This means that more goods should be produced and distributed for a minimum amount of resources used. For planning purposes, the state of health of individuals, a community or country must be known.
outcomes / parameters * distinct figures - life expectancy (length in years) - nutritional status (weight for age or height) * ratios mortality rates, morbidity rates, incidence and prevalence
Health
- refers to the condition in which resources are available only in a limited supply.
because choosing one health care activity means giving up something else in return. - defined as the benefit that must be foregone by not allocating the resources to the next best activity.
Trade-off
- is a situation in which more of one good thing can be obtained only by giving up of another thing.
point at which an economy is most efficiently producing its good and services and properly allocate its resources in the best way possible. - illustrates the concepts of scarcity, choice, and opportunity cost.
- represents the
Demand
Demand refers to quantity or amount of
goods or services consumers are willing and able to buy / purchase at a given price,place, and at a given period of time.
- Market: * a place where goods and services are being bought and sold. * any set of arrangements which allows buyers and sellers exchange goods and services with the following considerations: 1. type of goods and services being traded 2. number and size of buyers and sellers 3. degree of information that can flow freely.
market for health care involves buyers and sellers who interact to trade health care resources. - Both perfectly healthy individuals and those suffering from illness can be considered as buyers in the health care sector.
-A
to cure an illness but sometimes we want preventive medical treatment for future illnesses. - The sellers of health care are those people who provide medical health care services, i.e. MDs, RNs, DMDs, OTs, PTs, etc., and those who produce medical equipment, i.e. stethoscope, blood pressure unit, and others.
be interested on demand for health and health care services. 1. It helps us predict the peoples reaction and behavior. 2. It tells something about how much the people value health services.
Determinants of Demand
those that actually determine the
quantity of demand or the factor that influence how much of certain goods and services people are willing to buy.
1.Price factor price of the good or service. 2.Non-price factors consumers income, the most important non-price factor underlying demand in income.
Non-price factors:
1. Income a change in income will cause a change in demand. Ex. consumers tend to buy more goods and acquire more services when their income increases; on the other hand, demand for such goods and services declines once their income decreases.
2. Changes in Consumers Taste and Preferences an increase in preference and taste for a certain good will certainly increase the demand for that particular good. Ex.- if people prefer those foods that reduce the chance of heart disease, the demand for high fiber diets will definitely increase.
3. Size of Population an increase in the population means more demand for goods and services. Inversely, less population means less demand for goods and services.
4. Prices of Related Goods and Services the quantity demand for any good or service is affected by changes in the prices of related goods and services. - Related goods are either substitute or complementary.
* a. Substitute goods/services are those that can be used in place of other goods / services. For ex., an increase in the price of one good / service will cause an increase in the demand for the other good or service.
* b.
Complementary goods are goods that go or are consumed generally together. They are related in such a way that an increase in the price of one good will cause a decrease in the demand for the other good. Ex., if the price of dental procedures rose significantly, then many people would not bother to get their teeth checked regularly. This would lead to a fall in the demand for dentures.
5. Consumers Expectation of Future Prices the quantity of a good or service demanded within any period depends not only on prices in that period but also on prices expected in future periods.
the future especially for basic commodities, the tendency is to buy more of these goods today. In the same manner, demand for such goods decreases if consumers expect prices to decline in the future.
Demand Schedule
The relationship between the quantity of
a good or service demanded and the price of that good or service. Ex. as the price increases the demand decreases.
Demand Schedule
Price of Meat per kg.
Quantity Demanded in kgs. 200,000 190,000 180,000 170,000 160,000 150,000 140,000
Demand Curve
Shows
graphically the relationship between the quantity of a good or service demanded and its corresponding price, with other variables held constant. The demand curve is typically downwardsloping.
Unitary Demand
Price
Quantity
Elastic Demand
Price
Quantity
Inelastic Demand
Price
Quantity
Price
Quantity
Price
Quantity
Law of Demand
States that as price of a particular
product increases, quantity demanded of that product decreases; and as price of a particular product decreases, quantity demanded of that product increases, if other factors remain constant.
assumption of ceteris paribus, (all things being equal or other determinants remain constant); i.e. there is no change and movement in income, population, and others.
decreases by 50% from its original price, then the quantity demanded for such treatment increases.
Change in demand
Shifting from one demand curve to
increase in demand. Ex. demand curve shifts outwards as a result of: * increase in income * increase in taste and preferences. * rise in price of substitute * fall in price complement
Demand
Price
Quantity
called a decrease in demand. Demand curve shifts inwards as a result of: * decrease in income * fall in taste and preference * fall in price of substitute * rise in price of complement
Demand
Price
Quantity
Supply
the amount or quantity of goods and
services producers are willing and able to supply at a given price, at a given period of time.
Determinants of Supply
1. Price factor - price of the good / service: sellers would tend to supply more of the good or higher prices. Ergo, more goods and services are found in the market at higher prices. Ex. More students take up nursing due to higher salary.
2. Non-price factor a. Cost of input used - What motivates producers or sellers is to maximize profit. Hence, one of the determinants of supply is the cost of production. - An increase in the price of an input or the cost of production decreases the quantity supply because profitability of certain businesses decreases.
b. Change in technology - A quantity of health goods and services to be produced is determined not only by the cost of production used, but also by technology. - Technology represents the knowledge of how inputs can be combined to produce outputs. - State-of-the-art machines that use technology increase the quantity supply of goods or services which causes the reduction of cost of production.
c. Government regulations and taxes - it is expected that taxes imposed by the government increase cost or production which in turn discourages production because it reduces producers earnings. A higher degree of regulation will translate to lower supply in the market.
d. Government subsidies - subsidies or the financial aids / assistance given by the government reduce cost of production which encourages more supply.
e. Number of firms in the market - an increase in the number of firms in the market leads to an increase in supply of health goods and services.
f. Expectation of future price - expectation about future prices can shift the supply curve. This is true for supply as sellers or producers have expectation that affect their behavior. - when producers expect higher prices in the future of health goods and services, the tendency is to keep their health products and release them when the price rises. - inversely, supply of such health goods or services decreases if producers or sellers expect prices to decline in the future.
g. Change in the price of related goods - changes in the price of goods and services have a significant effect in the supply of such goods or services. - for instance, an increase in the price of health spa therapy treatment may likely encourage others to shift or establish new health spa centers if this gives them more profit.
Supply Schedule
Price of Meat per kg.
Quantity Supplied in kgs. 200,000 210,000 220,000 230,000 240,000 250,000 260,000
Supply curve
Price
Quantity
Price
Quantity
Price
Quantity
Change in supply
Shifting from one supply curve to another
Ex. supply curve shifts outwards as a result of: * decrease in price of goods * increase in cost of production * increase in availability of resources * presence of modern technology * increase in number of producers * decrease in taxes * increase in subsidies * good weather
Price
Quantity
of one variable to a certain change of another variable. It measures how quantity Q (demand and supply) responds to change in the determining factors F (such as own price, income or price of related goods).
Basic Formula
Percentage change in variable Q
Elasticity is the percentage change in one variable in relation to the percentage change in another variable.
Types of Elasticity
Elasticity provides a way of measuring how sensitive
demand and supply to a particular factor could be. Types: 1. Price elasticity measures the percentage change in quantity with respect to percentage change in price.
2. Price elasticity of demand - According to law of demand, quantity demanded tend to vary inversely with price, that is quantity demanded falls when price increases and quantity demanded rises when price decreases.
Price elasticity of demand measures the responsiveness of quantity in a good /service with respect to the change in its price. - Price elasticity of demand and pricing decisions are helpful tools for sellers to aid them in pricing decisions and can help them increase their total revenue.
responsiveness to any change in price while others are not. Others are prone to being elastic or inelastic than others. There are some reasons behind these elasticity differences:
the goods or services. -The more essential or necessary the goods or services are, the more inelastic the demand will be. -On the other hand, goods and services that are not very important tend to have an elastic demand. -Majority of health products are considered as price inelastic.
2. Number of available substitutes - Demands for goods or services with greater number of substitutes are inelastic, while goods with less no substitute have elastic demand. This is because an increase in the price of a certain product encourages consumers to look for alternatives or substitute goods available in the market.
3. The proportion of income in price changes -Demand is inelastic for health products and services where there are changes in price which have seemingly no effect on consumer income or budget. -Any change in price resulting to a substantial effect on consumers income has elastic demand.
4. The time period -The longer the time period is, the more elastic or inelastic the demand will be. -This is because consumers have enough time to adjust their buying behavior.
income rises, more goods and services will be demanded. But this is not always true. For ex.- average Filipinos eat healthy foods such as fish and rice. If their income rises, would they eat more? Hence, income elasticity simply measures whether the product is a normal or inferior good.
- Utility
denotes satisfaction, a subjective pleasure an individual can derive from consuming a good or service. - In economics, it explains how individuals divide their limited resources among commodities that provide them satisfaction.
* the only thing consumers can do is to rank or order his preference, referred to as ordinal ranking of preferences, hence the name ORDINAL UTILITY.
But these are subjective in nature. - This means that an individual has a distinctive way of choosing what is best for him in gaining satisfaction.
preferences will tell something about his/her personality. - It also depicts which goods provide satisfaction and how much satisfaction will he/she receives.
- Can we measure the satisfaction by using some units? The only way to measure satisfaction is to examine relative prices.
- It can be concluded that changes in tastes and preferences are less important that income and relative prices.
* Law
states that as a consumer uses a good or a service at one time, utility increases, reaches a maximu, and diminishes.
- this
incremental improvement in health generates less and less additions to total utility. - This means that as more goods are consumed, the extra satisfaction or marginal utility received decreases. In other words, utility decreases at decreasing rate with respect to health.
Intelligent consumers stop utilizing a certain good at a point of maximum satisfaction or else, having additional quantities of it will yield to a diminishing effect.
2. The Budget Line and Indifference Curve Analysis - The budget line is also known as the Demand Curve. It shows possible combinations of x and y that your budget can afford to buy. - The Indifferent Curve is a curve that convexes to the point of origin. It shows infinite combination of x and y that give the same level of satisfaction.
Optimum combination is the highest indifference curve that touched the Budget Line at Point of tangency.
income effect is a shift of the Budget Line to the right brought about by an increase in budget of the consumer. *this means that a consumer experiencing an increase in income has also a natural tendency to increase his/her buying power for goods x and y.
Substitution Effect has a pivotal movement budget toward x good if there is a decrease in price of it and there is no change in the price of y good. The budget is still the same but consumers choice is biased for the good which has a lower price, in this case good x.
* Paradox of Value
the Water-Diamond Theory or Paradox of Value (Adam Smith) explains the value you get from water and the value you get from diamonds.
-
Why is it that water which is so essential in life that one cannot live without it, is so cheap compared to the diamonds that are non-essential in life? Does it mean that water has less value than diamonds?
*The
answer is - there are 2 types of value: 1. Value in exchange (i.e diamonds) based on the scarcity of the commodity. 2. Value in use (i.e. water) based on the importance of the commodity. - Both have value.