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The Importance of Sample Selection Bias in the Estimation of Medical Care Demand Equations

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  • Mary Zimmerman Murphy

Abstract

This paper examines the importance of sample-selection bias in the estimation of demand equations for physician office visits, hospital outpatient visits, and hospital inpatient days. A technique suggested by J. J. Heckman (1976) is used that tests for and, when necessary, corrects such bias. Sample-selection bias can occur because each equation is estimated on a subsample of only those who consumed that type of medical care. Sample-selections bias is found to be a significant problem when ordinary least squares is used to estimate the primary care demand equations, although only somewhat of a problem for the hospital inpatient days equation.

Suggested Citation

  • Mary Zimmerman Murphy, 1987. "The Importance of Sample Selection Bias in the Estimation of Medical Care Demand Equations," Eastern Economic Journal, Eastern Economic Association, vol. 13(1), pages 19-29, Jan-Mar.
    • Handle: RePEc:eej:eeconj:v:13:y:1987:i:1:p:19-29
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume13/V13N1P19_29.pdf
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    References listed on IDEAS

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    1. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
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    3. Davis, Karen & Russell, Louise B, 1972. "The Substitution of Hospital Outpatient Care for Inpatient Care," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 109-120, May.
    4. Rosett, Richard N & Huang, Lien-fu, 1973. "The Effect of Health Insurance on the Demand for Medical Care," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 281-305, Part I, M.
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    6. Goldman, Fred & Grossman, Michael, 1978. "The Demand for Pediatric Care: An Hedonic Approach," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 259-280, April.
    7. Joseph P. Newhouse & Charles E. Phelps, 1976. "New Estimates of Price and Income Elasticities of Medical Care Services," NBER Chapters, in: The Role of Health Insurance in the Health Services Sector, pages 261-320, National Bureau of Economic Research, Inc.
    8. Hay, Joel W & Olsen, Randall J, 1984. "Let Them Eat Cake: A Note on Comparing Alternative Models of the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(3), pages 279-282, July.
    9. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
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    11. Greene, William H, 1981. "Sample Selection Bias as a Specification Error: Comment," Econometrica, Econometric Society, vol. 49(3), pages 795-798, May.
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    2. Kinge, Jonas Minet & Morris, Stephan, 2015. "The impact of childhood obesity on health and health service use: an instrumental variable approach," HERO Online Working Paper Series 2015:2, University of Oslo, Health Economics Research Programme.

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