Abstract

RESTREPO, Jairo  and  ROJAS, Kristian. The genesis of Health Economics in Kenneth Arrow (1963). Lect. Econ. [online]. 2016, n.84, pp.209-242. ISSN 0120-2596.  https://doi.org/10.17533/udea.le.n84a07.

Kenneth J. Arrow is one of the most prominent economists of the twentieth century. His concerns about competitive equilibrium and optimality under uncertainty conditions led him to publish what would be recognized as the seminal article on Health Economics, ''Uncertainty and the welfare economics of medical care''. This essay pays tribute to Arrow's work and discusses the intellectual foundations of the analysis of medical benefits in a welfare economics context, the validity of Arrow's original approach and its main implications. Here, the validity of Arrow's central hypothesis on the impossibility of reaching an efficient resource allocation through the market is defended, mainly because of the uncertainty associated to disease incidence. Also, implications of asymmetric information, moral hazard and social norms are discussed from Arrow's perspective, as well as the roles of state and market.

Keywords : Health Economics; welfare; Arrow; health services; market failures.

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