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Natural resource abundance and healthcare efficiency in Appalachia: A robust conditional approach

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  • Gearhart, Richard
  • Michieka, Nyakundi

Abstract

This study investigates the role of natural resource abundance on healthcare efficiency in Appalachia. Unconditional efficiency measures are calculated from a production process where health inputs are turned into health outcomes. We utilize a non-parametric robust order-m estimator where we condition our efficiency measures on secondary environmental variables that do not directly impact health in a production process. Unlike the unconditional estimation procedure which impacts the shape of the production frontier, as well as the distance to the frontier, the secondary environmental variables alter the location of the production frontier, with corresponding effects on efficiency. We find that taking into account the relatively worse socioeconomic and healthcare conditions in Appalachia improves healthcare efficiency by 1.6- and 1.9-percentage points, respectively. The presence of natural resource extraction measured by oil, natural gas or coal production, worsens healthcare efficiency by 0.14-percentage points, another vehicle of the resource curse. Regressing the conditional efficiency estimates on secondary environmental variables shows that counties with natural resource production are further from the production frontier and therefore more inefficient. Findings suggest that policymakers can improve health efficiency by incentivizing positive health behaviors, such as reduced obesity and smoking rates, which would mimic health-improving inputs in a production process.

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  • Gearhart, Richard & Michieka, Nyakundi, 2019. "Natural resource abundance and healthcare efficiency in Appalachia: A robust conditional approach," Energy Policy, Elsevier, vol. 129(C), pages 985-996.
    • Handle: RePEc:eee:enepol:v:129:y:2019:i:c:p:985-996
    DOI: 10.1016/j.enpol.2019.03.010
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    2. Seyfettin Erdo an & Emrah smail evik & Ayfer Gedikli, 2020. "Healthcare Expenditures Channel of Natural Resource Curse: The Case of Gulf Cooperation Council Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 285-293.
    3. Jhorland Ayala‐García & Sandy Dall'erba, 2021. "The natural resource curse: Evidence from the Colombian municipalities," Papers in Regional Science, Wiley Blackwell, vol. 100(2), pages 581-602, April.
    4. Ajide, Kazeem Bello & Ibrahim, Ridwan Lanre & Mohammed, Abubakar & Saleh Al-Faryan, Mamdouh Abdulaziz, 2023. "Infectious diseases and health outcomes’ implications of natural resource curse in Africa," Resources Policy, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Appalachia; Robust conditional order-m; Healthcare efficiency; Nonparametric econometrics;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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