Working Paper - Dov Chernichovsky


In an effort to understand the causes of poverty and its perpetuation in an African rural economy, this study analysed household data from the Rural Income Distribution Survey (RIDS) conducted in 1974-75 in Botswana. About 85 percent of Botswana's population in the mid seventies comprised rural households. More than 50 percent of these households were estimated to live below the Poverty Datum Line established by the Government. This fact underscored Botswana's unequal income distribution: the wealthiest 10 percent received 50 percent of rural incomes in the mid-l970s. Animal husbandry provided the lion's share, 44 percent, of average household income. Farming, although pursued with a relatively high share of family labor, provided only an estimated 11 percent of income. One impediment to improvement of agricultural incomes was the relative unavailability of good cleared land for farming. This situation affected adversely mostly female-headed households because they had limited access to productive assets, including cattle, and to wage employment. Improvement in the quality of life among Botswana's rural population at the time of the survey, seemed to require raising the relative returns to crop production, and generating wage employment in the rural areas.

NBER Working Paper No. 8470
Issued in September 2001
NBER Program(s):

Improved health, equity, macro-economic efficiency, efficient provision of care, and client satisfaction are the common goals of the health system. The relative significance of these goals varies, however, across nations, communities, and with time. As for health care finance, the attainment of these goals under varying circumstances involves alternative policy options for each of the following elements: sources of finance, allocation of finance, pay to providers, and public-private mix. The intricate set of multiple goals, elements, and policy options defies human reasoning, and, hence, hinders effective policymaking. Indeed, health system finance' is not amenable to a clear set of structural relationships. Neither is there a universe that can be subject to statistical scrutiny: each health system is unique. 'Fuzzy logic' and its underlying 'Expert System' that model human reasoning by managing knowledge' close to the way it is handled by human language, provides a powerful tool for systematic analysis of health system finance, and for guiding policy making. Assuming equal welfare weights for alternative goals, and mutually exclusive policy options under each health-financing element, the exploratory model we present here suggests that a German type health system is best. Other solutions depend on the welfare weights and mixes of policy options.


The conventional wisdom says that because the cost of health care for the aged is more than that of the young at any time, there is a positive relationship between the aging or higher life expectancy of the population and aggregate health care spending. It is difficult, however, to find evidence to support this argument. We present a simple framework that shows how aging of the population may not necessarily increase the total cost of medical care over time or be observed across nations. This follows because numerous other factors that change with aging affect cost of care in ways that are not age-neutral. Such factors include age-specific shifts in morbidity and mortality, growth in income and insurance coverage, rising levels of education and changing technology. Consequently, the relative medical costs of the aged may indeed increase, at least for demographic reasons. Simultaneously, however, the costs of the young may decrease for the same reasons. The Israeli experience, used as a basis for a cursory empirical discussion of the issues, supports the line of reasoning presented in the paper. Copyright © 2003 John Wiley & Sons, Ltd.

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