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Determinants of Thailand household healthcare expenditure: the relevance of permanent resources and other correlates

  • Albert A. Okunade

    (Department of Economics, The University of Memphis, Memphis, TN, USA)

  • Chutima Suraratdecha

    (PATH, Seattle, WA, USA)

  • David A. Benson

    (Department of Economics, Duke University, Durham, NC, USA)

Several papers in the leading health economics journals modeled the determinants of healthcare expenditure using household survey or family budgets data of developed countries. Past work largely used self-reported current income as the core determinant, whereas the theoretically correct concept of household resource constraint is permanent or long-run income (á lá Milton Friedman). This paper strives to rectify the theoretical oversight of using current income by augmenting the model with household asset. Using longitudinal data, we constructed 'wealth index' as a distinct covariate to capture the households' tendency to liquidate assets when defraying necessary healthcare liabilities after exhausting cash incomes. (Current income and assets together capture the household expanded resource base). Using 98 632 household observations from Thailand Socio-Economic Surveys (1994-2000 biennial data cycles) we found, using a double-hurdle model with dependent errors, that out-of-pocket healthcare spending behaves as a technical necessity across income quintiles and household sizes. Pre-1997 economic shock income elasticities are smaller than the post-shock estimates across income quintiles for large and small households. Proximity to death, median age, and assets are also among other significant determinants. Our novel findings extend the theoretical consistency of a multi-level decision model in household healthcare expenditure in the developing Asian country context. Copyright © 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1471
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 19 (2010)
Issue (Month): 3 ()
Pages: 365-376

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Handle: RePEc:wly:hlthec:v:19:y:2010:i:3:p:365-376
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. David Aristei & Federico Perali & Luca Pieroni, 2008. "Cohort, age and time effects in alcohol consumption by Italian households: a double-hurdle approach," Empirical Economics, Springer, vol. 35(1), pages 29-61, August.
  2. Felder, Stefan & Meier, Markus & Schmitt, Horst, 2000. "Health care expenditure in the last months of life," Journal of Health Economics, Elsevier, vol. 19(5), pages 679-695, September.
  3. David N. Weil, 2005. "Accounting for the Effect of Health on Economic Growth," Working Papers 2005-07, Brown University, Department of Economics.
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  7. Deaton, Angus, 1987. "Estimation of own- and cross-price elasticities from household survey data," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 7-30.
  8. Filmer, Deon & Pritchett, Lant, 1998. "Estimating wealth effects without expenditure data - or tears : with an application to educational enrollments in states of India," Policy Research Working Paper Series 1994, The World Bank.
  9. Parker, Susan W. & Wong, Rebeca, 1997. "Household income and health care expenditures in Mexico," Health Policy, Elsevier, vol. 40(3), pages 237-255, June.
  10. Eddy van Doorslaer & Owen O'Donnell & Ravindra P. Rannan-Eliya & Aparnaa Somanathan & Shiva Raj Adhikari & Charu C. Garg & Deni Harbianto & Alejandro N. Herrin & Mohammed Nazmul Huq & Shamsia Ibragimo, 2007. "Catastrophic payments for health care in Asia," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1159-1184.
  11. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  12. Peter Zweifel & Stefan Felder & Markus Meiers, 1999. "Ageing of population and health care expenditure: a red herring?," Health Economics, John Wiley & Sons, Ltd., vol. 8(6), pages 485-496.
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