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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
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    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.

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    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume13/V13N1P19_29.pdf
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    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 13 (1987)
    Issue (Month): 1 (Jan-Mar)
    Pages: 19-29

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    Handle: RePEc:eej:eeconj:v:13:y:1987:i:1:p:19-29

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    Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
    Phone: (201) 684-7346
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    Web page: http://www.ramapo.edu/eea/journal.html
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    1. Rosanna M. Coffey, 1983. "The Effect of Time Price on the Demand for Medical-Care Services," Journal of Human Resources, University of Wisconsin Press, vol. 18(3), pages 407-424.
    2. 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.
    3. Sindelar, Jody L, 1982. "Differential Use of Medical Care by Sex," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 1003-19, October.
    4. 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 279-82, July.
    5. 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.
    6. 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 109-20, May.
    7. Duan, Naihua, et al, 1983. "A Comparison of Alternative Models for the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(2), pages 115-26, April.
    8. 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 259-80, April.
    9. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July.
    10. 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 223-55, March-Apr.
    11. Greene, William H, 1981. "Sample Selection Bias as a Specification Error: Comment," Econometrica, Econometric Society, vol. 49(3), pages 795-98, May.
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