[http://cameron.econ.ucdavis.edu/e132/e132syl.html]

Department of Economics, University of California - Davis

FALL 2018

REVISED SYLLABUS November 19

Professor Colin Cameron, 1124 Social Sciences and Humanities

Email: accameron@ucdavis.edu Website: http://www.econ.ucdavis.edu/faculty/cameron

**Meeting: **Tues Thurs 9.00 - 10.20 am **Chem
179**

**Office Hours: **Monday
1.30-3.00 p.m.

Wednesday 3.30-5.00
p.m.

**Teaching Assistants:**

Joshua Grelewicz
jbgrelewicz@ucdavis.edu Office hours: Tuesday 12-1 pm
in room SSH 0118 and Wednesday 11am-noon in SSH 0116.

**Discussion Sections:
**Camila Saez

Joshua Grelewicz

The course goals are:

(1) Provide a detailed description of the institutional features of the health care market and current trends in this rapidly changing field;

(2) Demonstrate the use and usefulness of analyzing the health care market using economic analysis, particularly microeconomics, and some statistical/mathematical analysis.

Compared to other areas of economics, health economics is complicated by a lack of information (about what health services the consumer needs), great uncertainty (hence insurance) and payment through third-parties (insurance companies) rather than direct payment by the consumer.

(3) Analyze health data using regression methods and the statistical program Stata.

**Pre-requisites:**

Economics 100 or 100A (intermediate microeconomics)
or ARE 100A or consent of instructor.

Mathematics 16A-B: These are a
pre-requisite for Economics 100/100A.

**Regression class **(upper division): one of
Economics 102, Economics 140, ARE 106, Statistics 108 or consent
of instructor.

**COURSE OUTLINE: **

**A. **Introduction, Overview of U.S. Health
Market, getting started in Stata

Class 1.
Bhattacharya Chapter 1 + Supplemental
Notes.

**B. **Health Insurance in the U.S.: Facts,
definitions and Rand experiment

Classes 2-3. Bhattacharya Ch.18
+ Supplemental Notes.

**C. **Economics of Health Insurance:
Risk pooling, risk aversion, moral hazard

Classes 4-6. Bhattacharya Chs.7, 8, 9.11-9.12 + Supplemental Notes.

***** Class 7 Midterm Exam 1 *****

**C. **Economics of Health Insurance: moral
hazard, adverse selection, other countries

Class 8-9. Bhattacharya Chs.11 + Supplemental Notes.

**D****. **Economic Evaluation of Health
Services: cost-benefit and cost-effectiveness analysis

Classes 10-11. Bhattacharya Ch.14 + Supplemental
Notes.

**E. **Demand for Health Care: Grossman model

Classes 12. Bhattacharya Chs.2-3 + Supplemental Notes

**F****. **Suppliers: Physicians, begin
hospitals

Class 13. Bhattacharya Chs. 5, 6 + Supplemental Notes.

***** Classes 14-16. Cancelled
due to air pollution from Camp Fire *****

*****
This includes
cancelling midterm 2

Class 17. Bhattacharya Ch. 12 + Supplemental Notes.

G.

Class 18. Bhattacharya Ch. 20 + Supplemental Notes.

Dropped from original syllabus due to cancelled classes

Class 19. Bhattacharya Ch. 15 + Supplemental Notes.

Class 20. Review of Course

Additionally, some past exams and solutions are at http://cameron.econ.ucdavis.edu/e132/e132.html

A few days before classes start an electronic version (with try-before-you-buy access for 10 days) should be available through Red Shelf - click on the Modules tab in Canvas for access.

Copies of the textbook are on two-hour reserve in Shields Library.

Stata for regression:

The discussion sections are in university computer labs and the first discussion section will be on getting started in STATA.

Stata is installed in **93 Hutchison**, **2060 Scilab**
and the **Virtual Lab** (after 2060 SciLab closes - see http://virtuallab.ucdavis.edu)

**To see whether ****93 Hutchison and 2060 SciLab are available see**
**http://computerrooms.ucdavis.edu/available/**.

If you choose to purchase Stata go to http://www.stata.com/order/new/edu/gradplans/student-pricing/

For this course and other economics classes Stata/IC is more
than adequate and costs $45 (6 months), $89 (1 year); $198
(permanent copy).

To install Stata after it is purchased: (1) Choose the correct
operating system (e.g. Windows or Mac); (2) Choose the correct
version of Stata - the student price version is Stata/IC; (3)
When you first run Stata after installation it will ask for an
"authorization code". These codes are given in a pdf
attachment you will received in the email from Stata following
purchase (some are lengthy and it is easiest to cut and paste
them in).

To get started in Stata see http://cameron.econ.ucdavis.edu/stata/stata.html

** Lecture slides:
**Lecture Slides are posted at the course
Canvas site (http://canvas.ucdavis.edu)
under Files / Lecture Slides.

** Supplementary Material:
**The UCSD Intermediate Microeconomics
videos on topics such as externalities are at the course Canvas
site under Assignments / UCSD
Intermediate Micro Handbook.

**Midterm Exam1:
30% Thursday October 18
**Tues Oct 9, Tues Oct
16, Thurs Nov 1, Tues Nov 27 (was originally Nov 13), Thurs Nov 29, Thurs Dec 6.

Assignments: 15% Due 9.00 a.m.

**Assignments** are posted on Canvas under Files
/ Homeworks.

Doing the assignments is a valuable part of learning both health
economics and data analysis using Stata.

Assignments will be graded satisfactory (2%) or unsatisfactory
(0%). Full solutions will be distributed. Satisfactory means a
serious attempt to answer at least 80% of the questions. The
lowest of the scores on the six assignments is dropped, i.e. no
penalty for not handing in one assignment if the other five are
graded satisfactory. Assignments
must be handed in on time, so solutions can be discussed in
class and distributed in a timely manner. No
credit for late assignments.

**Exams** are closed book with a mixture of
short answer (about two-thirds) and multiple choice (about
one-third) questions.

**The final exam is comprehensive**: approximately 20% on
material up to first midterm, 40% on material from first midterm
to end of class 14; 30% on classes 17-19; and 10% on regression
with Stata.

FOR EXAMS YOU NEED TO BRING YOUR STUDENT PHOTO ID. I
WILL DECIDE WHERE TO SEAT YOU. CALCULATORS
WILL BE PROVIDED - you
must not use your own calculator or smartphone.

**Scores **are posted at Canvas. You have one
week from when work is first returned in class (or in discussion
section in the case of assignments), to raise any questions
about grading.

**Note that there is no automatic conversion
formula such as an 85 is a B.** Instead if 85 was the median
(middle) score among all students who took the class then you
would get the median grade which is most often C+/B-. To let you
know how you are going on each exam I give the distribution of
the scores for the exam along with a "suggestive" grading curve.
But the course grade is based on a course curve.

**Course grade** is determined by the total
score, with weights given above. The assignments are graded on a
generous scale (satisfactory or unsatisfactory), so most
students will get full credit on the assignment portion.
Therefore for most students the course score is determined by
scores on the assignments and exams. To indicate your progress I
give a grade on each midterm. But the final grade is determined
by summing the exam and assignment scores (and not by averaging
the grades).

**Grading policy: **To ensure fairness and consistency in
grading, the Department **expects** that the GPA in
all undergraduate economics courses will average 2.7. For example,
a distribution with 20% A's, 50% B's, 15% C's, 10% D's, and
5% F's could be consistent with an overall GPA of 2.7.

See http://economics.ucdavis.edu/undergrad-program/advising/courses/grading-policy

(1) All undergraduate and graduate course outlines (syllabi) should list or provide a link to the U.C. Davis Code of Academic Conduct which is at sja.ucdavis.edu/files/cac.pdf . This provides many leading examples of academic misconduct. You should read this.

(2) One specific example of academic honesty is copying from solutions to assignments given in previous 132 courses.

(3) If an instructor has a reasonable suspicion of academic misconduct, whether admitted by the student or not, the instructor shall report the matter to the Office of Student Support and Judicial Affairs.

(4) The instructor has authority to determine a grade penalty when academic misconduct is admitted or is determined by adjudication to have occurred; with a

maximum grade penalty of “F” for the course.

Note that Student Support and Judicial Affairs may separately impose sanctions for academic misconduct, including community service, suspension and dismissal.

The most common form of academic misconduct in Economics 132 is copying from past assignment solutions or copying (close to exact or exact) from other students. The most common penalty for doing so will be to receive zero for that assignment and additionally having your course grade reduced by one grade (examples: a B becomes a C, or a B- becomes a C-).