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Re-visiting the Health Care Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases?

  • Joan Costa-Font
  • Marin Gemmill
  • Gloria Rubert

    (Universitat de Barcelona)

While a growing literature examining the relationship between income and health expenditures suggests that health care is a luxury good, this conclusion is contentiously debated due to heterogeneity of the existing results. This paper tests the luxury good hypothesis using meta-regression analysis, taking into consideration publication selection, precision, and aggregation bias. The findings suggest that publication bias exists, a result that is robust irrespectively of the tests employed. Precision and aggregation bias also appear to play a role in the generation of estimates. The corrected income elasticity estimates range from 0.26 to 0.84, although we cannot reject the luxury good hypothesis for some of the performed corrections.

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Paper provided by Universitat de Barcelona. Espai de Recerca en Economia in its series Working Papers in Economics with number 197.

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Length: 29 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:bar:bedcje:2008197
Contact details of provider: Postal: Espai de Recerca en Economia, Facultat de Ciències Econòmiques. Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona. Spain.
Web page: http://www.ere.ub.es

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