Economic issues include:

• Public goods and externalities

• Asymmetric information and adverse selection

Econometric issues include:

• Hypothesis testing: using p values

• The F test of explanatory power

Data issues include:

• Household survey data

• Qualitative indexes

The issue

How much should the State spend on health? One might doubt this is a question for economists – perhaps medical professionals should decide on patients' needs and treatment costs or politicians should be asked about the desires of the electorate and its taxpayers. But economists can offer helpful tools with which to debate questions of this nature. No country has a blank chequebook, and public budgeting is a tense business of allocating scarce resources amongst competing needs. Economists can contribute helpfully to the debate on how resources might be best used by showing the relative costs and benefits of different strategies. This can help to reconcile, or at least to prioritise, diverse and sometimes conflicting objectives. Moreover, the question of how much governments should spend on health care is usually nested within the wider debate to which economists have long been central – namely, to what extent should the State be involved in the economy at all. In most countries this topic can be relied upon to produce heated argument from all ends of the political spectrum, in tones that are often highly ideological, and polemical.