Health represents a major determinant of individual well-being for two different reasons. First, individual health is directly and closely connected to individual happiness. Second, participation in economic activities, first of all participation in the labor market, requires a good health status. Yet, the health care system is one of the largest industries in which regulatory interventions influence resource allocation to a large extent. Hence, designing a good regulatory framework is of major importance to the health care sector as well as to the economy in general. This applies even more because – due to demographic change – the importance of the health care sector is likely to increase in the future.
Therefore, both regulation of health care systems and individual health-related behavior are important fields of economic research. In recent years, theoretical research has already made major progress in both fields. Generating empirical evidence addressing specific issues of health policy is of major importance to policy making today.
Applied empirical research represents a major strength of the health division. Today, advanced empirical research in health economics is first of all carried out in rather small research groups at various universities while the major research institutes – except for the RWI – are just marginally involved in such research. Moreover, research units from other disciplines concerned with public health issues often lack sufficient competence in economics and empirical methods. In particular, this research division has two research foci: empirical health economics and health policy.