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

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

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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File URL: http://eprints.lse.ac.uk/25303/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 25303.

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Length: 31 pages
Date of creation: Jan 2009
Date of revision:
Handle: RePEc:ehl:lserod:25303
Contact details of provider: Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.
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Web page: http://www.lse.ac.uk/

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