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CHAPTER I

HEALTH ECONOMICS:Its Meaning and Importance

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Objectives

Understand the definition of economics,health and health economics.

Know the relationship and importance of economics to health.

Know the governments objectives andgoals for economics and health.

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Objectives

Identify the basic health and economicproblems.

Know the different elements of economics.

Know and identify the general and specificfactors that affect health.

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WHAT IS ECONOMICS?

Economics is a discipline concerningproper allocation, utilization, and efficientuse of scarce resources to attain themaximum satisfaction of human beings.

It is a Social Science that deals withthe allocation of scarce resourcesamong alternative uses to attaindesired ends.

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Economics as Science

Scientific Method: the dispassionate developmentand testing of theories about how the worldworks.

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.

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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.

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Distribution: Everyone gets something. *Some gets something, some gets

nothing, something now but not in the

future, noting now and something in thefuture.

Economics, not something you said but

something you did. Ex. P5m for floodcontrol

Allocation

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Resources: Land, Labor, Capital(Physical, Financial, Human, Social)

Human wants: Individual, Collective

*what/ whose wants should besatisfied?

Scarce Resources

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Alternative: Equally desirable choice Opportunity Cost- What is given up

because of the choice.

Cost: Actual, Implicit, Opportunity(Economic)

Among Alternative Uses

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Benefit: gain towards attainment of goal.

What is our goal?

Ex. Job or The One?- outside Economics

Desired End

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Microeconomics: Study of how households andfirms make decisions and how they interact inthe markets.

Macroeconomics: Study of economy widephenomena, including inflation, unemployment,and economic growth.

Micro: Study the effects of rent control onhousing, impact of foreign competition on autoindustry or the effects of school attendance onworkers earnings.

Macro: Study the effects of borrowing by thefederal government, the changes over time inthe unemployment rate or alternative policies topromote growth in national living standards.

Division of Economics

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Elements of Economics

There are two elements of economics.a) Goods

b) ServicesGoods are items designed to bring utility.It is also known as tangible goods or

material goods.Services and goodwill are intangiblerendered by individual or groups

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a. Commodities according to purpose

Luxury commodities are items that are

not directly needed but bought for theprestige or status symbol that theyrepresent.

Basic commodities are goods that seek to satisfy the great level needs of mensuch as food, shelter and clothing.

Elements of Economics

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b. Commodities according toavailability

Economic commodities are those things,which are useful but scarce.

Free goods are goods, which are usefuland abundant.

Elements of Economics

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c. Commodities according to uses

Consumer commodities are finished

products that provide direct satisfactionto the end user.

Producer commodities are goods andservices that are used in the productionof other goods and services.

Elements of Economics

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Diagram On Elements of ECONOMICS

Goods and Services

Free Goods Economic Goods

Tangible Agricultural Land

(Measurable)

Free Goods Air

(Immeasurable)

TangibleWealth Intangible

Services rendered

Producer GoodsLand, Building

Machinery ConsumerGoods

Basic Goods Luxury Goods

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What are the main problems of economics?

1. What to produce?

2. How much to produce?3. How to produce?

4. For whom to produce?5. Where and When to produce?

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HEALTH

According to World Health Organization(WHO), health is a state of completemental, physical, and social well-

being, and not merely the absence of illness or diseases.

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Government objectives and goalsfor health

1. Increase life expectancy2. Provide ideal number of health care facilitiessuch as:

a. hospitalsb. medical clinicc. ambulance and others

3. Avail free medication & affordable prices of medicines most specially to public hospitals andclinics

4. Increase government funds for DOH

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General Factor that affects health: ENVIRONMENT

Specific determinants/factors that affecthealth

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.)

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PROPER USE OFRESOURCES(Economics)

S a t i s

f a c t i o

n

MaximizeEnvironment

H e a l t

h y

Economics And

HealthNature(God Creature) Peace & Order(Respect one another)

PRODUCTIVEOUTPUT

(EnvironmentallyFriendly)

UnityProgress

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Requirements for a Healthy Lifeby NCB

Friendly and healthyenvironment

Adequate medical facilitiesand manpower

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Enough medicine including vitamins

Healthy Food

Requirements for a Healthy Lifeby NCB

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Health System Modelby NCB

2. MENTAL WELL-BEING

a. Regular Exerciseb. Well Balanced Mealc. Drinking Potable Waterd. Avoiding Bad Habits

e. Retaining Good Habits

1. PHYSICAL WELL-BEING

a. Right Educationb. Able to identify which is good & badc. Make right decisionsd. Retaining Good Habits

3. SOCIAL WELL-BEING Interaction and participation(family, friends and to the country)

4. SPIRITUAL WELL-BEING Personal relationship with God

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Questions for Discussion:

A. What is the relationship of Economics to yourcourse?

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?