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CGD Policy Blogs


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The Opportunity Cost Neglect in Healthcare: Bad Choices Are Not About Overspend But Life Lost

In the language of economists, opportunity cost refers to the return or other forms of benefit that we could have received, but gave up, to take another course of action. In mathematical terms, it is the difference between the utility of what we have chosen and that from the foregone choice. Or, in much simpler terms, its what’s given up when making a choice. A positive opportunity cost shows that we made a good decision.

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Corrective Taxes to Save Lives

Governments use corrective taxes to reduce the use of products that harm well-being and create costs not just to society at large (externalities) but also to individual consumers who may underestimate the future health consequences of their current consumption. Taxes on gas to reduce pollution or on carbon dioxide emissions to reduce greenhouse gases are classic examples of this approach.

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Eliminating Duty-free Tobacco—What Went Wrong?

International commitments to curb duty-free sales of tobacco under the Framework Convention for Tobacco Control have been largely ineffective, despite their potential to contribute to tobacco control as well as fiscal goals.