IE NATURE OF THE COMMODITY'HEALTH CARE AND ITS EFFICIENT ALLOCATION Sfod Ecmomic Papern (pre-/986): Jul 1971: 23. 2: ABUINFORM Globk pg189 THE NATURE OF THE COMMODITY 'HEALTH CARE, AND ITS EFFICIENT ALLOCATIONI By A J CULYER SINCE economists began to turn their attention to matters concerning the efficient allocation of resources devoted to preventing, curing, and alleviating ill health round about the end of the 1950s a whole new are posing intriguing new questions has been opened up. Many of the most fundamental of these problems have yet to be cleared up(for example, the definition of the product'of health care institutions and how it may be measured). The purpose of this article is to attempt to resolve just one of these difficulties, namely, whether the commodity health care defined generically as the kinds of service provided by surgeons, physicians rses, hospitals, etc, is different from other commodities in particular and crucial ways such as to make some forms of organization of the health industry intrinsically inefficient and others intrinsically efficient. As i well known, this question has been the subject of frequent controversy over the last twenty years, a controversy that is today as lively as when it began, but a controversy, it is hoped to show here, that has been largely unproductive because it has been characterized n both sides by a surprising propensity to leap from certain interesting(and mportant)descriptive characteristics of health care to conflicting(and gain important) policy prescriptions What is even more surprising, most of this discussion has been conducted at an entirely a priori level with the practical conclusions being inferred in an ad hoc fashion, without a proper logical foundation. One reason for this may be that an explicit social welfare function has rarely been stated, though some contributions have been cast in a Paretian welfare economics mould. 3 There are how ever,other more powerful reasons why different analysts'conclusions have not been the same, and it is upon these that we shall concentrate 1 Acknowledgement is made to the NufField Provincial Hospitals Trust for a researc rant to the Institute of Social and Economic Research, University of York, for research into the social and economic problems of health care provision. The Trust is not, of course, been Loes[24][25][26] he Jewkeses [20][21]in particular. More cautious analysts include Buchanan and Lindsay eciwo woula explain the oxistonoo of tho ns titation of which th nomic analysis. For a recent attempt, and the only one to date to'explain'the NHS, ee Lindsay [30].Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. THE NATURE OF THE COMMODITY 'HEALTH CARE' AND ITS EFFICIENT ALLOCATION A J CULYER Oxford Economic Papers (pre-1986); Jul 1971; 23, 2; ABI/INFORM Global pg. 189