Last edited: January 9, 2013
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Randall P. Ellis, Professor
Room 555, Economics Department, Boston University
270 Bay State Road; Boston MA 02215
Tel: 617 353-2741
Office hours for spring term: Tuesdays 2-3:30, Wednesday 10:30-noon, or by appointment. (Thursdays are reserved for research.)
The web site for this class is http://blogs.bu.edu/ellisrp/EC581/
This is a masters level course in health economics, and hence I will assume that students are comfortable with calculus, statistics and economic models.
Students will learn how to apply economic analysis tools to understanding the economics of health and health care markets. The class will cover such topics as moral hazard, risk aversion, adverse selection, physician-patient interaction, managed care, regulation, payment systems for providers, and various international health topics. The course outline below highlights the topics covered. Additional readings will likely be added during the term.
Six Joint Meetings with Health Care Law and Economics
This year, for the first time, I have arranged to do six classes jointly with JD 960 Health Care Law and Economics, which is taught by BU Professor Kevin Outterson. We will meet in the usual classroom before proceeding to the Law School Auditorium on six dates. Three of the joint classes will be taught by Prof. Outterson, and three by Prof. Ellis. Dates and topics are on the detailed course calendar. Other than meeting jointly for these classes, the remaining 18 classes will be our own, the homework and exams will be written only for our class, and no background legal knowledge is expected. More details will be given in class.
The only prerequisite for the course is EC501 Microeconomic Theory. It will be very helpful if you have also had some level of econometrics, such as EC508 or EC414, although you can probably get by if you have had at least one of the statistics classes, EC507 or EC305. You are expected to be able to read papers that do econometrics rather than do econometrics. Talk to me if you are worried about your background.
There will be approximately five homework assignments, two in class midterms, and one final examination. As described below, you are invited to write an independent term paper instead of taking the final exam, but you have to tell me about this choice before March 21. Assignments and their due dates will be provided on the web site and announced in class.
Independent Term Paper Option.
Most economics MA students at BU do not get a chance to write a term paper. I invite you to do so. The length is not the primary consideration, although 6-8 pages typed would seem a reasonable minimum. It could either be a reexamination and extension of a topic already developed in a published paper, original work on a new analytical model, or the estimation of something interesting using data. It should be written up in a finished paper format, with a cover page (that includes a title, your name, the date, and an abstract), introduction, a BRIEF discussion of the relevant literature, methodology, results, conclusion, and bibliography. I encourage you to talk to me as soon as possible if you wish to do this option. The deadline for turning in a title and short abstract if you would like to do the paper is March 20 (First Wednesday after the March break) although the paper itself is not due until the day of the final exam.
The two midterm tests will be held on Wednesday, February 27 and Wednesday, April 3. These tests are held during regular class time and will probably not last the full class.
The final examination will be held at the regularly scheduled time shown below. This date and time cannot be changed. The location for the final examination will be announced later.
The coverage of the two midterms will cover the material covered only up through one week prior to the exam. Hence material covered through Friday February 15 will appear on the Feb 22 exam, and material covered through March 26 will be on the April 2 exam. Tests include the readings even if not covered in class. The coverage of the Final Exam is the entire course.
THE FINAL EXAM IS ALREADY KNOWN TO BE SCHEDULED FOR Wednesday May 8, from 3-5:00 p.m. ROOM CAS 323A (NOT THE USUAL ROOM)
This is the second day of the the exam period. Please do not make any plans to leave before then unless you are writing a term paper.
Grading weights will be as follows.
Midterm Test 1 20%
Midterm Test 2 20%
Final Examination or term paper 45%
Students are allowed to work on on homework assignments together, but must write up their answers independently.
Grades of homework assignments handed in after class on the due dates will be reduced by 50%. Please turn them in on time.
There will not be any makeup midterms
If you choose to miss an exam for any reason, the grade for the rest of the course will be given greater weight. For example, if you miss the first midterm, then since it is worth 20%, the average score on the remainder of the course will be divided by .80. If you miss two tests (not recommended), the remainder of the course scores will be divided by .60. All homework and test scores are normalized for the class average on that component so that each has the same mean and standard deviation, and the final course score is a weighted average as shown above. Students who miss the Final must take a makeup Final Exam at a later date.
Cheating and academic misconduct
It is a student’s responsibility to know and understand the provisions of the CAS Academic Conduct Code. This code, which includes a very useful discussion of plagiarism, is available at
Suspected cases of academic misconduct will be handled according to these guidelines, with sanctions that include reducing your grade, failing the course, probation, suspension and expulsion.
Please don’t cheat.
There is no standard text book for the course. The following two books are strongly recommended.
Thinking, Fast & Slow [Paperback] Daniel Kahneman, October 2011
Health Care Reform: What It Is, Why It’s Necessary, How It Works (paperback) by Jonathan Gruber and Nathan Schreiber (Dec 20, 2011)
The first reflects my new interests in behavioral economics, I hope to draw from it regularly.
The second one, is an easy read by a nationally known health economist at MIT and provides a very accessible overview of the rationale for the 2010 US health care reform.
Both are available on Amazon.com for under $20.
If you feel like you would like to read a traditional health economics text book, then the following is the best one available. ($90-140 on line)
Folland, Goodman and Stano (FGS), “The Economics of Health and Health Care“, Prentice Hall.
It is an undergraduate text that may be useful for background material, but is not required. Most recent edition is the sixth. There are few changes from earlier editions.
Original articles, review articles and many of my own writings will be the primary readings. Most articles will be posted on the course web site (Accessible only to the BU community). The selection of readings and web links will be posted during the course in light of student interests. You are encouraged to let me know of your particular interests.