Health economics is an area of economics that applies the principles of the discipline of economics to address problems of health and health care. Both health and health care are commodities with characteristics that make them different from standard goods and services that are bought and sold in private markets. This means they require particular attention from economists in order to consider the use of resources devoted to producing health care and changing health.

Health cannot be purchased directly. Instead it is “produced” by the levels and combinations of health “determinants,” that is, factors that influence health and illness

Definition of Health Economics:

Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, values, and behavior in the production and consumption of health and health care.

Health economics applies the principles of economics to address problems of health and health care. It identifies the factors that contribute to the health of individuals and populations and identifies the most productive ways of using whatever resources are available for improving health.

Therefore, health economics deals with the analysis of allocation mechanisms for health resources in society, or in other words, how society makes coordination decisions to meet the healthcare needs of its population. Economics as behavioral science influences health economics as a subbranch through the contribution of economic thought to healthcare issues. In summary, health economics is the branch of economics that deals with the decision-making of how to allocate resources to health provision in economies. Healthcare depends on global innovation of healthcare services and technologies, where a wide range of stakeholders are involved, e. g. health scientists, governments, vaccine developers, patients, the general public, etc. Which health institutions are necessary to have a well-equipped health system?