HEALTH ECONOMICS: Its Meaning and Importance

CHAPTER I

Objectives
Understand the definition of economics, health and health economics.
Know the relationship and importance of economics to health. Know the governments objectives and goals for economics and health.

Objectives
Identify the basic health and economic problems. Know the different elements of economics. Know and identify the general and specific factors that affect health.

WHAT IS ECONOMICS?
Economics is a discipline concerning
proper allocation, utilization, and efficient use of scarce resources to attain the maximum satisfaction of human beings.
It is a Social Science that deals with the allocation of scarce resources among alternative uses to attain desired ends.

Economics as Science
Scientific Method: the dispassionate development and testing of theories about how the world works. Economists try to address their subject with a scientists objectivity. Assumptions can simplify the complex world and make it easier to understand. However Economics is applied.

Economics as a Social Science

Humans are perpetually changing. Process of falsification of Hypothesis. (Statistics), and aims the discovery of truth. Management: Purposive change towards a well defined goal. Aim: Effective realization of goal.

Allocation
Distribution: Everyone gets something. *Some gets something, some gets nothing, something now but not in the future, noting now and something in the future. Economics, not something you said but something you did. Ex. P5m for flood control

Scarce Resources
Resources: Land, Labor, Capital (Physical, Financial, Human, Social) Human wants: Individual, Collective

*what/ whose wants should be satisfied?

Among Alternative Uses

Alternative: Equally desirable choice Opportunity Cost- What is given up because of the choice. Cost: Actual, Implicit, Opportunity (Economic)

Desired End
Benefit: gain towards attainment of goal. What is our goal? Ex. Job or The One?- outside Economics

Division of Economics
Microeconomics: Study of how households and firms make decisions and how they interact in the markets. Macroeconomics: Study of economy wide phenomena, including inflation, unemployment, and economic growth. Micro: Study the effects of rent control on housing, impact of foreign competition on auto industry or the effects of school attendance on workers earnings. Macro: Study the effects of borrowing by the federal government, the changes over time in the unemployment rate or alternative policies to promote growth in national living standards.

Elements of Economics
There are two elements of economics. a) Goods b) Services

Goods are items designed to bring utility.

It is also known as tangible goods or material goods.

Services and goodwill are intangible

rendered by individual or groups

Elements of Economics
a. Commodities according to purpose Luxury commodities are items that are not directly needed but bought for the prestige or status symbol that they represent. Basic commodities are goods that seek to satisfy the great level needs of men such as food, shelter and clothing.

Elements of Economics
b. Commodities according to availability Economic commodities are those things, which are useful but scarce. Free goods are goods, which are useful and abundant.

Elements of Economics
c. Commodities according to uses Consumer commodities are finished products that provide direct satisfaction to the end user. Producer commodities are goods and services that are used in the production of other goods and services.

Diagram On Elements of
ECONOMICS
Goods and Services Free Goods
Tangible Free Goods
(Immeasurable)
Air

Economic Goods
Tangible
Wealth

Agricultural Land

(Measurable)

Services rendered

Intangible

Producer Goods
Land, Building Machinery

Consumer Goods

Basic Goods

Luxury Goods

What are the main problems of economics?

1.
2. 3. 4. 5.

What to produce?
How much to produce? How to produce? For whom to produce? Where and When to produce?

HEALTH
According to World Health Organization (WHO), health is a state of complete mental, physical, and social wellbeing, and not merely the absence of illness or diseases.

Government objectives and goals for health

1. Increase life expectancy

2. Provide ideal number of health care facilities such as:

a. hospitals b. medical clinic c. ambulance and others

3. Avail free medication & affordable prices of medicines most specially to public hospitals and clinics 4. Increase government funds for DOH

General Factor that affects health:

ENVIRONMENT

Specific determinants/factors that affect health

poverty (e.g. malnutrition because of incapability)

education (ex. acquire information suitable and not suitable for health

customs & traditions (e.g. ethnic group, beliefs in quack doctors or albularyos) technological advancement (e.g. X ray, echogram, etc.)

Health Economics
Health economics is a scientific study of mans activity in the pursuit of achieving better quality of life by proper allocation of limited & unlimited resources.

It is a body of knowledge that deals with mans activity like the manner of providing & using health resources. It can be goods & services, tangible & intangible, limited or unlimited, in the pursuit of achieving better quality of life.

Environment Healthy

PROPER USE OF RESOURCES

(Economics)

Maximize

Satisfaction

(God Creature)

Nature

Economics And Health

(Respect one another)

Peace & Order

Progress

PRODUCTIVE OUTPUT
(Environmentally Friendly)

Unity

Requirements for a Healthy Life

by NCB
Adequate medical facilities and manpower

Friendly and healthy environment

Requirements for a Healthy Life

by NCB

Healthy Food

Enough medicine including vitamins

Health System Model

by NCB
a. b. c. d. e. Regular Exercise Well Balanced Meal Drinking Potable Water Avoiding Bad Habits Retaining Good Habits

1. PHYSICAL WELL-BEING

2. MENTAL WELL-BEING

a. Right Education

b. Able to identify which is good & bad

c. Make right decisions d. Retaining Good Habits 3. SOCIAL WELL-BEING 4. SPIRITUAL WELL-BEING

Interaction and participation

(family, friends and to the country)

Personal relationship with God

Questions for Discussion:

A. What is the relationship of Economics to your course? B. How would you relate Economics to your course? C. What do you think is the importance of economics to you as a student? D. Do you know how to apply basic Economics problem to your life as a student? E. Do you know that Economics is the best subject being studied in the world?