Were are we now in british health economics ? Mark Blaug
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Health economics took off in 1970 or thereabouts, just after the take-off date for the economics
of education. Although early health economics made use of human capital theory as did the
economics of education, it soon took a different route inspired by Arrow’s work on medical
insurance. The economics of education failed to live up to its promising start in the 1960s and
gradually ran out of steam. The economies of health, however, has made steady theoretical and
empirical progress since 1970 principally in coming to grips with the implications of supplierinduced
demand and the difficulties of evaluating health care outcomes. Some of the best work
on British health economics has been in the area of normative welfare economies, defining
more precisely what is meant by equity in the delivery of health care and measuring the degree
of success in achieving equity. Recent efforts to reform the NHS by the introduction of “quasi
markets” have improved the quality and quantity of health care in Britain. In short, British
health economics has been characterized by the use of Pigovian piecemeal rather than Paretian
global welfare economics, retaining a distinctive style that sets it apart from American health
economies. ©1998 John Wiley & Sons, Ltd.