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The effects of medical insurance on durables consumption in rural China

Author

Listed:
  • Meiling Ying
  • Zaichao Du

Abstract

Purpose - The New Rural Cooperative Medical Scheme (NRCMS), implemented in China since 2003, has greatly increased the access of the poor to health services and alleviated the hardship caused by catastrophic medical payments. Both the precautionary saving theory and the Buffer-Stock saving theory would predict a positive effect of this event on consumption. The purpose of this paper is to empirically study the effects of medical insurance on durables consumption in rural China. Design/methodology/approach - Using China Health and Nutrition Survey (CHNS) data, the authors study the effects of medical insurance on durable goods consumption in rural China through a panel binary choice model. Findings - It is found that households with medical insurance have a significantly higher level of durables consumption, and their probabilities of purchasing durables increase by 2.0 per cent-4.4 per cent, which support the precautionary saving theory and the Buffer-Stock saving theory. Originality/value - Unlike previous studies, the authors focus on the effects of medical insurance on the consumption of durables, which have a big weight in household wealth and are more sensitive to income uncertainty.

Suggested Citation

  • Meiling Ying & Zaichao Du, 2012. "The effects of medical insurance on durables consumption in rural China," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(2), pages 176-187, May.
  • Handle: RePEc:eme:caerpp:v:4:y:2012:i:2:p:176-187
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    References listed on IDEAS

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    1. Jonathan Gruber & Aaron Yelowitz, 1999. "Public Health Insurance and Private Savings," Journal of Political Economy, University of Chicago Press, vol. 107(6), pages 1249-1274, December.
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    3. Wagstaff, Adam & Pradhan, Menno, 2005. "Health insurance impacts on health and nonmedical consumption in a developing country," Policy Research Working Paper Series 3563, The World Bank.
    4. Xiaoyun Sun & Sukhan Jackson & Gordon Carmichael & Adrian C. Sleigh, 2009. "Catastrophic medical payment and financial protection in rural China: evidence from the New Cooperative Medical Scheme in Shandong Province," Health Economics, John Wiley & Sons, Ltd., vol. 18(1), pages 103-119.
    5. Stephen P. Zeldes, 1989. "Optimal Consumption with Stochastic Income: Deviations from Certainty Equivalence," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 275-298.
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    7. Christopher D. Carroll, 1992. "The Buffer-Stock Theory of Saving: Some Macroeconomic Evidence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 61-156.
    8. Eric M. Engen & Jonathan Gruber, 1995. "Unemployment Insurance and Precautionary Saving," NBER Working Papers 5252, National Bureau of Economic Research, Inc.
    9. Chou, Shin-Yi & Liu, Jin-Tan & Hammitt, James K., 2003. "National Health Insurance and precautionary saving: evidence from Taiwan," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1873-1894, September.
    10. Wagstaff, Adam, 2007. "The economic consequences of health shocks: Evidence from Vietnam," Journal of Health Economics, Elsevier, vol. 26(1), pages 82-100, January.
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    Cited by:

    1. Fang, Xiangming & Jing, Ruiwei & Zeng, Guang & Linnan, Huan Wan & Zhu, Xu & Linnan, Michael, 2014. "Socioeconomic status and the incidence of child injuries in China," Social Science & Medicine, Elsevier, vol. 102(C), pages 33-40.

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