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The Demand for Outpatient Medical Care in Rural Kenya

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  • Randall P. Ellis
  • Germano M. Mwabu

Abstract

This paper develops a new specification of the demand for outpatient medical care and then estimates the model using data from a household survey conducted in rural Kenya in 1989. A four-stage nested logit model is used with a variable number of choices at several nodes. The first stage modeled is the choice of whether or not to report an illness, while the second is the probability of seeking treatment conditional on a positive report of illness. In contrast with the previous literature, the first two stages are modeled separately rather than as a single decision to seek treatment. The third stage, the individual's choice of a particular provider, is modeled as depending upon individual and household characteristics, as well as characteristics of specific health facilities from which choices are made. The fourth stage modeled is the choice of a mode of transport to the health facility (walking or taking the bus), an endogenous choice variable that greatly affects the total cost of seeking treatment. The previous empirical literature has not attempted to separate out the probability of reporting an illness from the probability of seeking treatment, and hence has estimated only the combined effect of variables such as income on the illness and the decision to seek treatment. This study finds that income and wealth variables are negatively related to reporting an illness, but positively related to deciding to seek treatment. Most of the demographic variables seem to influence the probability of reporting an illness rather than the decision to seek treatment. This finding is significant because if the results from one setting are applied to others, it is important to know whether demand for health care depends upon the underlying illness patterns or the demographics of the population. This study would suggest that the former are more important. The choice of mode of transportation is found to be is clearly endogenous, and affected by travel time, travel costs, and the income of the household. Assuming that consumers always walk to a facility unduly restricts the potential choices available to consumers. Willingness to pay for bus transport also provides a useful basis for estimating the value attached to missionary and government health centers. Facility quality strongly influences the choice of provider, and has more overall explanatory power than the cost of the service. At the same time, the model yields some unexpected results, possibly due to collinearity, or possibly suggesting that the facility choice process is quite complex.

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Bibliographic Info

Paper provided by Boston University, Institute for Economic Development in its series Boston University - Institute for Economic Development with number 15.

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Date of creation: Apr 1991
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Handle: RePEc:fth:bosecd:15

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References

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  1. Heller, Peter S., 1982. "A model of the demand for medical and health services in Peninsular Malaysia," Social Science & Medicine, Elsevier, vol. 16(3), pages 267-284, January.
  2. 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.
  3. Mwabu, Germano M., 1986. "Health care decisions at the household level: Results of a rural health survey in Kenya," Social Science & Medicine, Elsevier, vol. 22(3), pages 315-319, January.
  4. William H. Dow, 1999. "Flexible Discrete Choice Demand Models Consistent With Utility Maximization: An Application to Health Care Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 680-685.
  5. Florian Heiss, 2002. "Structural choice analysis with nested logit models," Stata Journal, StataCorp LP, vol. 2(3), pages 227-252, August.
  6. Gertler, Paul & Locay, Luis & Sanderson, Warren, 1987. "Are user fees regressive? : The welfare implications of health care financing proposals in Peru," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 67-88.
  7. Dor, Avi & Gertler, Paul & van der Gaag, Jacques, 1987. "Non-price rationing and the choice of medical care providers in rural Cote d'Ivoire," Journal of Health Economics, Elsevier, vol. 6(4), pages 291-304, December.
  8. Kenneth Train, 1985. "Qualitative Choice Analysis: Theory, Econometrics, and an Application to Automobile Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200554, December.
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Cited by:
  1. Gupta, Indrani & Dasgupta, Puranmita, 2002. "Demand for Curative Health Care in Rural India: Choosing between Private, Public and No Care," Working Papers 82, National Council of Applied Economic Research.
  2. Gan, Lydia L. & Frederick, James R., 2010. "The Willingness to Spend on Healthcare: Evidence from Singapore," Review of Applied Economics, Review of Applied Economics, vol. 6(1-2).
  3. Jimenez, Emmanuel & DEC, 1994. "Human and physical infrastructure : public investment and pricing policies in developing countries," Policy Research Working Paper Series 1281, The World Bank.

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