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Re-visiting the health care luxury good hypothesis: aggregation, precision, and publication biases?

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  • Costa-i-Font, Joan
  • Gemmill, Marin
  • Rubert, Gloria

Abstract

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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  • Costa-i-Font, Joan & Gemmill, Marin & Rubert, Gloria, 2009. "Re-visiting the health care luxury good hypothesis: aggregation, precision, and publication biases?," LSE Research Online Documents on Economics 25303, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:25303
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