How can economics be used to help alleviate poverty and increase the health of and opportunities for people around the world?
“We’re looking at ways to get children in developing countries vaccinated. We’re asking what’s the best way to increase the education of girls in developing countries, what’s the best way in general to get people out of poverty, and how do we reduce health care costs in the United States? We’re asking all of these different policy-related questions,” says Nesson.
“It’s not just about … stocks and bonds and bank accounts,” he says. “Increasingly, we’re making very important contributions in a wide variety of areas.”
Nesson researches ways in which public policies affect people’s health behaviors. “I take general economic ideas and apply that to the analysis of peoples’ health behaviors and how firms and the government act in the health care sector,” he says. “Most of what I do focuses on the consumers.”
He is especially interested in policies and behaviors related to smoking. For example, if the government raises cigarette taxes, it provides more revenue and may convince people to quit smoking, thus reducing lung cancer and decreasing the number of heart attacks. Nesson seeks to discover if such policies are effective and if there are any unintended consequences—people may simply change the way they smoke to get more nicotine out of a single cigarette, rather than smoke less.
A new way to measure health inequality
Nesson recently received a Robert Wood Johnson Foundation grant of over $117,000 to support his research from January 2015 to December 2016. He conducts his research in collaboration with Joshua Robinson, assistant professor of economics at the University of Alabama at Birmingham Collat School of Business. Nesson and Robinson attended graduate school together at Emory University.
“There is a lot of research in economics that looks at what characteristics of people seem to be related to their health, and a lot of this focus is on the relationship between income, education, socio-economic status, and health,” he says. Measuring income, education, and socio-economic status is pretty simple, but measuring health is more complicated.
Currently, a person’s health is often measured very subjectively. A research study might ask subjects to answer questions like, “On a scale of 1-5, where 1 is the best and 5 is the worst, how would you rate your health right now?” Nesson says a lot of studies use this type of measure, but he seeks a more objective and accurate measure.
“One of the big improvements that we want to make to the health inequality literature is … coming up with a different and hopefully better way to measure health,” he says.
Nesson and his colleague propose use of a measurement called multivariate general entropy. “Our measure leads us to a different conclusion than the 1-2-3-4-5 subjective health status does, and that is that there seems to be much less connection between socio-economic status and health inequality than the traditional measure would lead you to believe. Our conjecture is that what happens when people are asked ‘How healthy are you on a scale of 1-5,’ they bring a lot of other stuff into their response than just their health status. And they think about their socio-economic status when they answer that question. So that gives you a much stronger relationship between income or wealth and health than might actually be the case.”
A person’s health involves an array of factors, which makes it difficult to create a single health measurement. “If you take 10 different health metrics and have some way to collapse them all into one measure of health for people, you’re throwing away a lot of information. We have to find some way to aggregate all of these different characteristics together into one measure of health for everyone. What entropy (the measurement he uses) does is it gives us the best possible way to aggregate all this stuff together in a way that preserves as much information from all of these underlying measures of health as possible.
“We don’t know how different our results will be yet from what is currently being done, since we’re still estimating our models. However, theoretically, our methods will allow researchers to account for the multidimensional nature of health in estimating the relationship between income and health inequality,” Nesson says. “There are a number of reasons why this makes a lot more sense than current methods, but we still have a lot of work to do before we’ve settled on a specific methodology and generated empirical results.”
The origin of an idea
Nesson became intrigued by economics during college, when he realized the immense effect the field could have. “I was mostly struck by the wide variety of issues that economists are studying, everything from recessions and financial issues to crime, development, poverty, sports and health. It just made a lot of sense to me, and it really clicked that (economics) is a powerful set of tools for understanding how the world works.”
He soon learned about multivariate general entropy from one of his professors in graduate school, Esfandiar Maasoumi, arts and sciences distinguished professor of economics at Emory University. Maasoumi developed the measurement to assess well-being, not health. “You basically have the exact same issues with well-being as you do with health,” Nesson says. Current studies use the same scale of 1-5 to measure people’s well-being, so Maasoumi used entropy to gain a more objective measurement. Because a person’s well-being has numerous characteristics, as does one’s health, Nesson had the idea to apply entropy in his own research.
By using this objective measurement, Nesson may permanently change the way economists measure health inequality.