Are Health-Care Services Luxury Goods?

In the theory of economy, goods are often split into necessity goods (necessities), which must be purchased for daily life, and luxury goods, which satisfy other needs such as those attributable to social status. Many researches deal with the problem of health-care services – some proved that there are luxury goods, while some proved that health-care benefits are necessity goods. Based on literature review, we have posed the following research hypothesis (H1): income elasticity for health-care spending is lower than 1 in EU countries. We have analyzed the relationship between total health expenditure per capita (THCEPC) and income – represented by gross domestic product per capita (GDPPC). We have also incorporated other variables, characterizing society’s structure: Gini coefficient, a percentage of population at risk of poverty, health state self-assessment, and healthy life years (HLY) indicator, separately for male and female population. We have found that (1) decline in the value of the Gini coefficient increased the level of THCEPC; (2) in the case of the female population, shortening of HLY stimulated the growth of THCEPC, while for male population the relationship was reversed; and (3) income elasticity of THCEPC is equal to 1.17, which means that health-care benefits are luxurious goods, with income elasticity higher than 1. Data were obtained from Eurostat Database, covering the years 2004–2014 (26 countries).