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Unobserved heterogeneity and censoring in the demand for health care

  • Angel López-Nicolás

    (Departament d'Economia i Empresa, Universitat Pompeu Fabra, Barcelona, Spain)

In this paper we estimate a demand for private medical services equation based on the tradition of Grossman′s model of demand for health using data for a panel of Spanish households. The econometric specification accounts for the censored nature of the data, which arises from no participation and infrequency of purchases, and the existence of unobserved heterogeneity, which arises from the non-observability of health states. Our evidence suggests that ignoring these features can have a significant impact on the size, sign and significance of the model estimates. The estimates for the participation and consumption processes also suggest that the deduction of expenditures on health care currently applicable in the Spanish tax system are positively associated to income and fertility. © 1998 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 7 (1998)
Issue (Month): 5 ()
Pages: 429-437

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Handle: RePEc:wly:hlthec:v:7:y:1998:i:5:p:429-437
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar..
  2. Blundell, Richard & Meghir, Costas, 1987. "Bivariate alternatives to the Tobit model," Journal of Econometrics, Elsevier, vol. 34(1-2), pages 179-200.
  3. Manuel Arellano & Olympia Bover, 1990. "La econometría de datos de panel," Investigaciones Economicas, Fundación SEPI, vol. 14(1), pages 3-45, January.
  4. 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.
  5. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September.
  6. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  7. Garcia, Jaume & Labeaga, Jose M, 1996. "Alternative Approaches to Modelling Zero Expenditure: An Application to Spanish Demand for Tobacco," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 489-506, August.
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