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Bayesian analysis of the two-part model with endogeneity: application to health care expenditure

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Author Info
Murat K. Munkin (Department of Economics, University of Tennessee, Knoxville, Tennessee, USA)
Partha Deb (Department of Economics, Hunter College, New York, USA)
Pravin K. Trivedi (Department of Economics, Indiana University, Bloomington, Indiana, USA)

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Abstract

This paper studies the effect of managed care on medical expenditure using a model in which the insurance status is assumed to be endogenous. Insurance plan choice is modeled through the multinomial probit model. The medical expenditure variable, the outcome of interest, has a significant proportion of zeros that are handled using the two-part model, extended to handle endogenous insurance. The estimation approach is Bayesian, based on the Gibbs Sampler. The model is applied to a sample of 20 460 individuals obtained from the Medical Expenditure Panel Survey. The results provide substantial evidence of selectivity. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.891
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File URL: http://qed.econ.queensu.ca:80/jae/2006-v21.7/
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 21 (2006)
Issue (Month): 7 ()
Pages: 1081-1099
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Handle: RePEc:jae:japmet:v:21:y:2006:i:7:p:1081-1099

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Keane, Michael P, 1992. "A Note on Identification in the Multinomial Probit Model," Journal of Business & Economic Statistics, American Statistical Association, vol. 10(2), pages 193-200, April.
  2. Melenberg, Bertrand & van Soest, Arthur, 1996. "Parametric and Semi-parametric Modelling of Vacation Expenditures," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(1), pages 59-76, Jan.-Feb.. [Downloadable!] (restricted)
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  3. 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.
  4. Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June. [Downloadable!] (restricted)
  5. John Geweke & Gautam Gowrisankaran & Robert J. Town, 2003. "Bayesian Inference for Hospital Quality in a Selection Model," Econometrica, Econometric Society, vol. 71(4), pages 1215-1238, 07. [Downloadable!] (restricted)
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  6. Chib, Siddhartha & Hamilton, Barton H., 2002. "Semiparametric Bayes analysis of longitudinal data treatment models," Journal of Econometrics, Elsevier, vol. 110(1), pages 67-89, September. [Downloadable!] (restricted)
  7. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July. [Downloadable!] (restricted)
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  8. Dana P. Goldman, 1995. "Managed Care as a Public Cost-Containment Mechanism," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 277-295, Summer. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Brendan Kline & Justin L. Tobias, 2008. "The wages of BMI: Bayesian analysis of a skewed treatment-response model with nonparametric endogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 767-793. [Downloadable!]
  2. Munkin, M & Trivedi, P. K, 2009. "Incentives and Selection Effects of Drug Coverage on Total Drug Expenditure: a Finite Mixture Approach," Health, Econometrics and Data Group (HEDG) Working Papers 09/22, HEDG, c/o Department of Economics, University of York. [Downloadable!]
  3. Rainer Winkelmann, 2009. "Copula-based bivariate binary response models," Working Papers 0913, University of Zurich, Socioeconomic Institute. [Downloadable!]
  4. Andrew M. Jones, 2007. "Identification of treatment effects in Health Economics," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1127-1131. [Downloadable!]
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