This paper surveys the types of issues with which health economists have been concerned. It is intended to introduce noneconomists to the kinds of questions that economists have regarded as important. Economists' work in the health economics area may be usefully divided into “positive” and “normative” studies. Positive studies are those designed to describe, or make predictions about, how the health care system, or parts of it, actually operate. Conversely, normative studies are intended to provide statements as to how the health care system should operate. The major areas surveyed include the concept and estimation of the “production function” for health, the distinction between private and social costs, determinants of prices of medical inputs, and benefit-cost analysis.
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