Journal Article

An institutional and evolutionary perspective on health economics

Geoffrey M. Hodgson

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 32, issue 2, pages 235-256
Published in print March 2008 | ISSN: 0309-166X
Published online October 2007 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bem033
An institutional and evolutionary perspective on health economics

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  • Welfare and Poverty
  • Other Economic Systems
  • Economic Methodology
  • Economics of Health
  • Microeconomics
  • Welfare Economics
  • Information, Knowledge, and Uncertainy

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Neoclassical theoretical approaches dominate modern health economics. However, the peculiarities of healthcare provision are so unusual that neoclassical theory is especially unsuited to the area. Even mainstream health economists often abandon Paretian welfare considerations to focus on needs instead. Problems relating to uncertainty and externalities are also widely acknowledged. This article shows that there are additional important pecularities of healthcare that are relatively neglected in the literature. Some of these concern healthcare needs: while health itself is a universal need, needs for healthcare provision are largely involuntary, varied and idiosyncratic. These issues have important consequences for the planning of healthcare systems and the extent of transaction costs in any market-based system. These factors, combined with the inherent dynamism of modern healthcare needs and capabilities, make institutional and evolutionary approaches especially suitable for healthcare economics.

Keywords: Healthcare systems; Human needs; Neoclassical economics; Institutional economics; Evolutionary economics; B52; B53; D01; D02; D60; D80; I10; I31; P40

Journal Article.  10513 words. 

Subjects: Welfare and Poverty ; Other Economic Systems ; Economic Methodology ; Economics of Health ; Microeconomics ; Welfare Economics ; Information, Knowledge, and Uncertainy

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