Oecd workshop 6 7 june 2007
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OECD workshop (6-7 June 2007). " Measuring Education and Health Volume Output" Discussion of Draft chapter 1 Terminology and Concepts André VANOLI. Outcome ?. Outcome = result ; of what ? Tautology : output = outcome of production process (G & S)

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OECD workshop (6-7 June 2007)

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Oecd workshop 6 7 june 2007

OECD workshop (6-7 June 2007)

"Measuring Education and Health

Volume Output"

Discussion of Draft chapter 1

Terminology and Concepts

André VANOLI


Outcome

Outcome ?

  • Outcome = result ; of what ?

  • Tautology : output = outcome of production process (G & S)

  • Outcome = result of utilization process ; of what ? ; what extension ?

  • Output, acquisition, utilization

  • Means versus results


Utilization process of g s

Utilization process of G & S

  • Possible lag (time, quantity) between acquisition and utilization

  • Various lengths of utilization processes

  • Effects generally combined with effects of other factors : externalities, economic, natural family and social environment

    separability issue

  • Individual/societal effects

  • Immediate/deferred effects

  • Direct effects/indirect effects through changes in states


States and changes in states

States and changes in states

  • States : education, health, culture, civic spirit, social cohesion, internal safety, external security, natural environment

  • States of individuals, groups, countries, societies

  • New branches of statistical observation and measurement to be developed

  • Statistics, indicators, accounts


Again outcome

Again : Outcome?

  • Various possible notions of outcome in economic, social and environmental observation

  • Overall investigation needed of the whole field of G & S and beyond

  • Similar basic issues arise in all cases

  • Necessary to investigate from both sides :

    - starting from types of G & S (e.g. food, cars, weapons, health services)

    - starting from types of outcome (e.g. life expectancy, progress of society, health states)

  • Discussion of the meanings of outcome in ch. 1 (box 2, table 2) too narrow


Means utilization results

Means, Utilization, Results

  • MeansUtilization Results (outcomes)

    Output Combin. with . direct . Satisfactions

    other factors . indirect - individual

    through - societal

    changes . Utility

    in states . Welfare (interm. step) . Well-being

    . Happiness

  • Berndt et all.1998

    Medical care State of health Utility

  • Ch. 1 Outcome Utility

    Output (interm. Step) - subjective

    - not directly

    observable


Characteristics

Characteristics

  • Quality as quantity of characteristics, quality adjustment as changes in quantities of characteristics

  • Case of output of capital goods (Triplett, Gordon)

  • Characteristics command the average efficiency of capital goods in use

  • Thus, a link between output of means and utilization of means

  • Characteristics in the case of consumption goods


Characteristics in the case of services

Characteristics in the case of services

  • Issue less investigated for services, with exceptions (communication services)

  • Made more complex with increased sophistication of ratemaking, e.g. communication, transportation services (availability conditions)

  • Different degrees of complexity among services


Characteristics education and health

Characteristics : education and health

  • Very often non-market services (government, NPISHs)

  • Market sub-sector generally controlled, little competition, insurance

  • Problems similar for market and non-market measures

  • Draft ch. 1 : sets of characteristics proposed by education and health experts numerous, very different physical units (no example given), problems of aggregation

  • Proposal (par. 31) : subsume several characteristics into a single indicator that reflects the contribution of the product to outcome (state of health or education)


Outcome and utility

Outcome and utility

  • Par. 31 and 32 (ch. 1) deserve careful examination

  • End of comment on ccls. 3, para 32 :

    . hedonic techniques, several utility-enhancing characteristics revealed a posteriori by examining market prices : are they not detected a priori and then their (market) prices estimated via hed. techn.?

    . outcome-based quality adjustment, single utility-enhancing characteristics determined a priori and measured on a non-monetary scale : risk of surreptitiously leaving field of market or transactions values-equivalent toward catching kind of "total economic value" – equivalent (cf. environmental economists)?


Outcome and utility cont

Outcome and utility (cont.)

  • Draft seems ambiguous in this respect

  • Ch. 2 Educ. Serv.

    - par. 1 : "in ch. 1 ….the utility enhanced by a product could be summarized in a measurable single dimension called "outcome"….."

    - this total utility approach not followed in N.A. for market products

    - however, actual approach in ch. 2 (academic scores as usual measurement level of knowledge and skills) is different :


Outcome and utility cont1

Outcome and utility (cont.)

  • transfer of knowledge transmitted /received = direct counterpart of each other, other factors being neutralized

  • scores at exams (room for discussion) = a "physical" measure of both output quality and (immediate) utilization of output quality

  • what relation between par. 1 and the content of ch. 2 (which seems relevant from N.A. viewpoint)?


Outcome and utility cont2

Outcome and utility (cont.)

- Ch. 1 and 3 (Health) : cost and value weights

  • Value weights – ambiguity current/constant values, difficulty perceived in ch. 1, second part of par. 35 :

    welfare perspective controversial if implying total value of health or education services different from total expenditure for these services

  • however not implicitly said that welfare perspective implies including consumer's surplus (irrelevant in NA)

  • Compromise suggested (par. 37) : use cost weights, assume equality of cost and utility shares; formulation utility shares irrelevant in N.A. (marginal utilities different from total utilities)


Outcome and utility cont3

Outcome and utility (cont.)

  • in ch. 3, box on the case of statins (par. 57, a report, not a recommendation) illustrates the issue for a drug : difference between value weight (life-years saved considered) of £115 per prescription and cost of £27 = a kind of consumer‘ surplus ?

    - QALYs (ch. 1 and 3) in this respect ?

  • attractive but problematic approach in N.A. central framework

  • ch. 3 seems reticent as regards QALYS, shows difficulties, expresses reservations


Outcome and utility cont4

Outcome and utility (cont.)

  • However, more basic problems

    • characteristics of output vanish

    • result of weighting procedure through preferences expressed : is it significantly different from the case of statins ?

  • QALYs probably not relevant in N.A. Central framework

  • QALYs useful in context of cost (preferably means)/enlarged benefits analysis in satellite health accounts


Outcome and utility cont5

Outcome and utility (cont.)

- For N.A. central framework purposes

  • states (in various fields) to be measured as objectively as possible

  • try to define observable characteristics of states and changes therein


Road radars

Road radars

- An illustrative case : road radars

  • main characteristics : precision in measuring vehicles speed, capacity to read vehicles identification numbers, capacity to observe traffic on all road lanes

  • quality-adjustment in N.A. central framework based on changes in these characteristics

  • characteristics relevant for both output and utilization process (direct effects)

  • indirect effects : change in drivers behaviour, decrease in accidents number and seriousness, life-years saved


Road radars cont

Road radars (cont.)

  • QALYs can be relevant and very useful in context of cost (preferably means)/enlarged benefits analysis in satellite health accounts, transportation or mobility accounts

  • Other cases to investigate :

    e.g. tobacco issue


Improved output volume measures input measures and productivity estimates for nm services

Improved output volume measures, input measures and productivity estimates for NM Services

- Often said : output volume measures will allow productivity measures in NM services

- Caution : improved input volume measures to be incl. in the picture

- Issue not really taken in the draft (see however scheme 2.1, ch. 2)

- Intermediate inputs like pharmaceutical products

- Capital inputs like medical equipment

- Labour inputs in relation with technical progress and education, training of health and education services staff


Output input productivity cont

Output, input, productivity (cont.)

- Organization issues specially important ; TFP estimates

- Absence in the draft of analysis of input and output relation regrettable

  • Analysis too much focussed on treatments of diseases (DRG, etc…) as elementary product, mainly in hospitals (patient treatment pathway)

  • Other health services nearly appear as anomalies

  • Treatments of diseases have similarity with … works in the construction industry ; however, as in the latter, inputs and components matter (is ratemaking of DRGs or similar not based on costs of inputs ?)


Conclusion

Conclusion

- difficult issue, embarrassing (notably : health)

- relationship with human assets/capital (alluded to in draft)

- relationship with measures (indicators, aggregates) of well-being (individuals, society)

- overall analysis needed, danger of inconsistencies

. all G & S

. all human activities perhaps

. health : special emphasis on prevention

- Problems of interpretation standard economic theory

- current values/constant values adjustments


Conclusion cont

Conclusion (cont.)

- caution with terminology (outcome, utility) in NA central framework

- present draft : presentation state of the art (best practices), possible orientations, etc…; very useful

- however premature as a Handbook ? Stress provisional status ("Towards …")


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