Do Red Herrings Swim in Circles? – Controlling for the Endogeneity of Time to Death
AbstractStudies on the effect of ageing on health care expenditures (HCE) have revealed the importance of controlling for time-to-death (TTD). These studies, however, are subject to possible endogeneity if HCE influences remaining life expectancy.This paper introduces a ten year observational period on monthly HCE, socioeconomic characteristics, and survivor status to first predict TTD and then uses predicted values of TTD as an instrument in the regression for HCE.While exogeneity of TTD has to be rejected, core results concerning the role of TTD rather than age as a determinant of HCE (the “red herring” hypothesis) are confirmed.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0073.
Length: 19 pages
Date of creation: Oct 2008
Date of revision:
Other versions of this item:
- Felder, Stefan & Werblow, Andreas & Zweifel, Peter, 2010. "Do red herrings swim in circles? Controlling for the endogeneity of time to death," Journal of Health Economics, Elsevier, vol. 29(2), pages 205-212, March.
- I10 - Health, Education, and Welfare - - Health - - - General
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-11-04 (Economics of Ageing)
- NEP-ALL-2008-11-04 (All new papers)
- NEP-HEA-2008-11-04 (Health Economics)
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