Is Health Care a Luxury? New Evidence from OECD Data
AbstractMost research using cross-country data find income elasticities equal to or exceeding unity with respect to health expenditure. These conclusions might be confounded due to omitted variables bias and the presence of unobserved country and year specific determinants of per capita health expenditures. I obtain results supporting these hypotheses using recent (1990–98) data from fifteen OECD countries. Specifically, OLS coefficient estimates drop by more than 50% with the use of two-way fixed effects models and the inclusion of various demand and supply based determinants of per capita health expenditures, implying income elasticities of between 0.21 and 0.51. Weighted Least Squares (WLS), Generalized Least Squares (GLS) and Instrumental Variables (IV) estimation yield similar results. Copyright Springer Science + Business Media, Inc. 2005
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal International Journal of Health Care Finance and Economics.
Volume (Year): 5 (2005)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=106603
health expenditure; income;
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.:
- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, June.
- Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 67-85, February.
- Blomqvist, A. G. & Carter, R. A. L., 1997.
"Is health care really a luxury?,"
Journal of Health Economics,
Elsevier, vol. 16(2), pages 207-229, April.
- Howard Oxley & Maitland MacFarlan, 1994. "Health Care Reform Controlling Spending and Increasing Efficiency," OECD Economics Department Working Papers 149, OECD Publishing.
- Herwartz, Helmut & Theilen, Bernd, 2000.
"The determinants of health care expenditure: Testing pooling restrictions in small samples,"
SFB 373 Discussion Papers
2000,78, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Helmut Herwartz & Bernd Theilen, 2003. "The determinants of health care expenditure: testing pooling restrictions in small samples," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 113-124.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Pierre-Yves Crémieux & Pierre Ouellette & Caroline Pilon, 1999. "Health care spending as determinants of health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 627-639.
- Gerdtham, Ulf-G. & Sogaard, Jes & Andersson, Fredrik & Jonsson, Bengt, 1992. "An econometric analysis of health care expenditure: A cross-section study of the OECD countries," Journal of Health Economics, Elsevier, vol. 11(1), pages 63-84, May.
- Christopher J. Ruhm, 1996.
"Are Recessions Good For Your Health?,"
NBER Working Papers
5570, National Bureau of Economic Research, Inc.
- Di Matteo, Livio & Di Matteo, Rosanna, 1998. "Evidence on the determinants of Canadian provincial government health expenditures: 1965-1991," Journal of Health Economics, Elsevier, vol. 17(2), pages 211-228, April.
- Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
- Hansen, Paul & King, Alan, 1996. "The determinants of health care expenditure: A cointegration approach," Journal of Health Economics, Elsevier, vol. 15(1), pages 127-137, February.
- Miguel Gouveia, 1996. "The public sector and health care," International Tax and Public Finance, Springer, vol. 3(3), pages 329-349, July.
- Joan Costa-Font & Marin Gemmill & Gloria Rubert, 2008.
"Re-visiting the Health Care Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases?,"
Working Papers in Economics
197, Universitat de Barcelona. Espai de Recerca en Economia.
- Costa-Font, J & Gemmill M & Rubert G, 2009. "Re-visiting the Health Care Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases?," Health, Econometrics and Data Group (HEDG) Working Papers 09/02, HEDG, c/o Department of Economics, University of York.
- Chee-Ruey Hsieh & Ya-Ming Liu & Chia-Lin Chang, 2013.
"Endogenous technological change in medicine and its impact on healthcare costs: evidence from the pharmaceutical market in Taiwan,"
The European Journal of Health Economics,
Springer, vol. 14(2), pages 287-295, April.
- Hsieh, Chee-Ruey & Liu, Ya-Ming & Chang, Chia-Lin, 2011. "Endogenous technological change in medicine and its impact on healthcare costs: evidence from the pharmaceutical market in Taiwan," MPRA Paper 35147, University Library of Munich, Germany.
- Angulo, Ana María & Barberán, Ramón & Egea, Pilar & Mur, Jesús, 2011.
"An analysis of health expenditure on a microdata population basis,"
Elsevier, vol. 28(1), pages 169-180.
- Angulo, Ana María & Barberán, Ramón & Egea, Pilar & Mur, Jesús, 2011. "An analysis of health expenditure on a microdata population basis," Economic Modelling, Elsevier, vol. 28(1-2), pages 169-180, January.
- David Prieto & Santiago Lago-Peñas, 2012. "Decomposing the determinants of health care expenditure: the case of Spain," The European Journal of Health Economics, Springer, vol. 13(1), pages 19-27, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.