Health Services Exam 1

Info about cost and utility.

Why do individuals make choices? (2)

Because they can, and because they must

health economics

studies how individuals, organizations, firms, governments and nations make choices regarding their health and healthcare in the allocation of scarce resources (time and money) to satisfy their unlimited wants.

choices include…

all possible allocations (combinations) of actions/resources used to reach goals/satisfy wants.

treatment choice (does/does not) equal treatment chosen

does NOT

cost =

LESS of something you like

benefits =

MORE of something you like

In economics, negative outcomes of a choice are _____ of that choice.

costs

In economics, positive outcomes of a choice are ____ of that choice.

benefits

tradeoff

both positive and negative outcomes

opportunity cost

the next best choice (ex: -2 is your choice, so -5 is the opportunity cost of picking -2)

decision

a choice made over at least 2 choices.

domains

aspects of a decision

components

parts of each domain, or aspect of a decision

consumption bundle

all components associated with a given choice

examples of domains when making a choice?

pain, amount of visits, cost

examples of components when making a choice?

intensity (of pain), multiple or single (visits), $ or $$$ (cost)

utility

a construct of satisfaction and measures how much value is associated with a particular choice (consumption bundle)

where is utility assigned? (components within the choice or the WHOLE choice)

whole choice

optimal choice

those with the highest utility

assumptions for choosing the optimal choice?

1) individuals are rational (ex: prefer more utility vs. less)

2) utility is a good thing (ex: desired, of value)

factor loadings

representing the relative importance of components with numbers