Assignment
Question1 (800 words)
There were about 88,000 persons on the waiting list for organs, mostly kidneys, for transplant operations in the United States in the year 2005 (UNOS, 2005). In the UK, approximately 6000 people are waiting for organs - and fewer than 3000 transplants are performed each year (UK Transplant, 2005). In most countries there is a persistent shortage of organs resulting in a substantial loss of life and health.
a)
(i) Why do you think these shortages exist?
(ii) Suppose quantity demanded of organs (e.g. kidney) goes up with price. Can you think of a reason why demand for organs would defy the Law of demand?If organ was available in a free market, how would the shortage be reflected in a supply-demand framework, where demand for an organ is upward sloping? Explain using an appropriately labelled diagram.
(iii) Continuing with this hypothetical case (of a market for organs), do you expect the marketdemand curve for organs to be price elastic or price inelastic? What about the supply curves? Explain why. (Draw the supply and demand curves in part (ii) keeping in mind these elasticities)
b) "We should allow a market for human organs where purchase and sale of organs for transplant surgery can be conducted just like any other economic goods." Do you agree or disagree? Justify your stance from an ethical point of view or an efficiency point of view.
Question 2 (1200 words)
A Hypochondriac in the Grossman model: Hypochondria or ‘illness anxiety disorder' is a psychosomaticcondition that is the result of an inaccurate perception of the condition of body or mind despite the absence of an actual medical condition. An individual suffering from hypochondriasis is known as a hypochondriac. Hypochondriacs become unduly alarmed about any physical or psychological symptoms they detect, no matter how minor the symptom may be, and are convinced that they have, or are about to be diagnosed with, a serious illness.
Imagine an individual in the Grossman model who suddenly developshypochondriasis.
a) How would this affect her optimal level of health? Explain your answer in the light of the three roles that health plays in the model. Use appropriate diagrams to facilitate your explanation.
b) Now imagine this hypochondriac suddenly wins a mega jackpot lottery of $1 million. How does this exogenous income shock change decisions about her health status?
Question 3 (800 words)
"The emergency room is always busier on full moon nights". There has been a reasonably widespread belief among medical professionals in the last decade that suicide rate rises with lunar phase.
a) Is there any scientific evidence to validate this claim (cite at least two authentic journal articles).
b) If the claim is valid, explain why there might be a higher incidence of suicide on full moon. If not, what behavioural bias is responsible for such views? Explain.
c) Briefly discuss another example in healthcare where such bias may be present.
d) What role does "present-bias" play in patients' health-related (e.g. lifestyle) choices? Provide an example that has not been already discussed in class.