Essays on health economics

This dissertation contributes to the design of better policy implications and improvements of well-being among older adults, especially when resources are limited. This is done by using proper econometric methods and taking advantage of the richness of the Indonesian Family Life Survey, a panel data set containing detailed information for both respondents and their biological parents.;Chapter 2 analyzes the health transmission from parents to their children when they become older adults. I match the health status of older respondents to parental characteristics (several health measures and education) to see if any correlations exist in Indonesia. I find that strong intergenerational correlations exist. For example, children having parents with more difficulties with ADLs are more likely to have the same problem as older adults. However, surprisingly, the magnitude of correlations becomes significantly lower for those born in richer areas of Indonesia such as Java and Bali. This suggests that the level of development at birth or early childhood, which may include having better health infrastructure, substitutes for the influence of parental health and hence highlights the importance of public policies that focus on community level infrastructure development in less developed areas, in order to solve health inequality.;Chapter 3 examines the determinants of chronic health conditions and explains their persistence. I incorporate dynamics into a health demand function, finding strong correlations between lagged and current health measures when nothing else is controlled. This could represent the influence of lagged health or fixed unobserved factors such as genetic endowments and childhood health. To disentangle these, I estimate the influence of lagged health by using first-difference two-step generalized method of moments (FD-GMM), where the first-differencing removes fixed unobserved factors and keeps only lagged health. I found that it is this fixed effect, representing both genetic endowments and early life cycle including childhood health, that is most important in explaining later life chronic conditions. The impact of past health conditioning on the fixed effect, captured by the coefficients on lagged health measures, is weak, with estimated coefficients relatively close to zero. These results are robust to potential measurement errors in health and to sample attrition. Socio-economic status also has very little influence on current health, again conditioned on the fixed effect and on the influence of lagged health. In order to investigate if past health has different impacts across demographic or economic groups, I disaggregate the sample across age, household per capita expenditure level (PCE), and years of education. The results show that those with less education tend to show more persistence, compared to those with higher education.;In developing countries like Indonesia, health disparities are serious issues since they persist over generations due to the lack of proper interventions and also prevail among disadvantaged groups such as those with less educations. My dissertation suggests more effective and efficient ways to employ interventions and resolve health disparities, using robust econometric technique and rich data sets.