IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v16y2009i2p177-181.html
   My bibliography  Save this article

Relations between health care expenditure and income: an application of local quantile regressions

Author

Listed:
  • M. -Y. Chen
  • F. -L. Lin
  • C. -K. Chang

Abstract

In this article, local relationship between per capita health care expenditure (HCE hereafter) and GDP is investigated with local quantile regressions. Logarithmic per capita GDP and HCE of 154 countries in 2001 and 25, 50 and 75% quantile regressions are considered. Three main findings are obtained from our empirical study. First, conditional distribution of per capita HCE on GDP is asymmetric. For lower GDP countries, the conditional distribution is skewed to the right which means less health care tends to be consumed. On the contrary, the conditional distribution is skewed to the left which implies more health care is apt to be consumed for high GDP countries. Second, variance of the conditional distribution is larger when per capita GDP is low and smaller when per capita GDP is high. This confirms the necessity of restricting the sample observations to OECD countries for holding the homogeneity of HCE when the conditional mean is considered. Third, whether health care is 'necessary' or 'luxury' depends on the level of per capita GDP. For 50% quantile, the income elasticity is significant >1 when per capita GDP is greater than US$ 1882 (ln(1882) = 7.56), which indicates that health care becomes luxury for countries with per capita GDP higher than US$ 1882. For 75% quantile, the elasticity is significantly >1 and health care becomes luxury for countries with per capita GDP higher than US$ 1737 (ln(1737) = 7.46). As to 25% quantile, the elasticity is significantly >1 and health care becomes luxury for countries with per capita GDP higher than US$ 1920 (ln(1920) = 7.56). These results indicate that health care is a necessity for 37 countries with per capita income lower than $ 1920 and is luxury for other countries.

Suggested Citation

  • M. -Y. Chen & F. -L. Lin & C. -K. Chang, 2009. "Relations between health care expenditure and income: an application of local quantile regressions," Applied Economics Letters, Taylor & Francis Journals, vol. 16(2), pages 177-181.
  • Handle: RePEc:taf:apeclt:v:16:y:2009:i:2:p:177-181 DOI: 10.1080/13504850601018114
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504850601018114&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fitzenberger, Bernd, 1998. "The moving blocks bootstrap and robust inference for linear least squares and quantile regressions," Journal of Econometrics, Elsevier, vol. 82(2), pages 235-287, February.
    2. Gerdtham, Ulf-G. & Lothgren, Mickael, 2000. "On stationarity and cointegration of international health expenditure and GDP," Journal of Health Economics, Elsevier, vol. 19(4), pages 461-475, July.
    3. Ulf‐G. Gerdtham, 1992. "Pooling international health care expenditure data," Health Economics, John Wiley & Sons, Ltd., vol. 1(4), pages 217-231, December.
    4. Koenker, Roger & Zhao, Quanshui, 1996. "Conditional Quantile Estimation and Inference for Arch Models," Econometric Theory, Cambridge University Press, vol. 12(05), pages 793-813, December.
    5. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
    6. Albert Okunade & Mustafa Karakus, 2001. "Unit root and cointegration tests: timeseries versus panel estimates for international health expenditure models," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1131-1137.
    7. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    8. 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.
    9. Koenker, Roger & Park, Beum J., 1996. "An interior point algorithm for nonlinear quantile regression," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 265-283.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. El-Osta, Hisham S., 2011. "The Impact of Human Capital on Farm Operator Household Income," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(1), April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:16:y:2009:i:2:p:177-181. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.