Keywords: Health, Antibiotics, Externalities, Insurance, Moral Hazard,
The discovery of Penicillin and its effectiveness at treating bacterial infections revolutionized the medicine. However, it was not long before the first generations of bacteria began developing resistance towards the early antibiotic. This problem is not unique to …show more content…
First, it will attempt to estimate the externality of antibiotic use in terms of increasing rate of antibiotic-resistant bacteria. In other words, estimate the marginal impact a course of antibiotics has on drug-resistant infections or similar metric. Next, investigate the role that ex post moral hazard has in terms of contributing to the greater use of antibiotics and thus the increased rate of drug resistant bacteria.
In terms of estimating the effect an additional course of antibiotics has on the rate of drug-resistant bacteria, this paper will focus its analysis at the U.S. state level. Across the U.S. there is great variation in the level of antibiotics prescription rates. This will serve as the main variable of interest in estimating the negative externality of decreased antibiotic effectiveness and increased antibiotic-resistant