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Do you have to win it to fix it? A longitudinal studyof lottery winners and their health care demand

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  • Cheng, Terence C.
  • Costa-i-Font, Joan
  • Powdthavee, Nattavudh

Abstract

We exploit lottery wins to investigate the effects of exogenous changes to individuals' income on the utilization of health care services, and the choice between private and public health care in the United Kingdom. Our empirical strategy focuses on lottery winners in an individual fixed effects framework and hence the variation of winnings arises from within-individual differences in small versus large winnings. The results indicate that lottery winners with larger wins are more likely to choose private health services than public health services from the National Health Service. The positive effect of wins on the choice of private care is driven largely by winners with medium to large winnings (win category > $500 (or US$750); mean = $1922:5 (US$2,893.5), median = $1058:2 (US$1592.7)). There is some evidence that the effect of winnings vary by whether individuals have private health insurance. We also find weak evidence that large winners are more likely to take up private medical insurance. Large winners are also more likely to drop private insurance coverage between approximately 9 and 10 months earlier than smaller winners, possibly after their winnings have been exhausted. Our estimates for the lottery income elasticities for public health care (relative to no care) are very small and are not statistically distinguishable from zero; those of private health care range from 0 { 0.26 for most of the health services considered, and 0.82 for cervical smear.

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  • Cheng, Terence C. & Costa-i-Font, Joan & Powdthavee, Nattavudh, 2018. "Do you have to win it to fix it? A longitudinal studyof lottery winners and their health care demand," LSE Research Online Documents on Economics 68024, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:68024
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    1. Mark Shepard & Katherine Baicker & Jonathan Skinner, 2020. "Does One Medicare Fit All? The Economics of Uniform Health Insurance Benefits," Tax Policy and the Economy, University of Chicago Press, vol. 34(1), pages 1-41.
    2. Gangadharan, Lata & Harrison, Glenn W. & Leroux, Anke D., 2019. "Are risks over multiple attributes traded off? A case study of aid," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 166-198.
    3. Joan Costa-Font & Nattavudh Powdthavee, 2023. "Does money strengthen our social ties? Longitudinal evidence of lottery winners," Rationality and Society, , vol. 35(2), pages 139-166, May.
    4. Joan Costa-Font & Mario Györi, 2023. "Income windfalls and overweight: evidence from lottery wins," Empirical Economics, Springer, vol. 64(5), pages 2005-2026, May.
    5. Belloc, Ignacio & Molina, José Alberto & Velilla, Jorge, 2023. "Effects of Lottery Wins on Household Labor Supply," IZA Discussion Papers 16327, Institute of Labor Economics (IZA).
    6. Tran, My & Gannon, Brenda & Rose, Christiern, 2023. "The effect of housing wealth on older adults’ health care utilization: Evidence from fluctuations in the U.S. housing market," Journal of Health Economics, Elsevier, vol. 88(C).
    7. Joan Costa-i-Font & Mario Gyori, 2020. "Can Unearned Income Make Us Fitter? Evidence from Lottery Wins," CESifo Working Paper Series 8738, CESifo.
    8. Kim, Seonghoon & Koh, Kanghyock, 2021. "The effects of income on health: Evidence from lottery wins in Singapore," Journal of Health Economics, Elsevier, vol. 76(C).
    9. Nguyen, Cuong Viet & Nguyen, Minh Khanh Hoang & Phung, Tung Duc & Tran, Oanh Ngoc, 2023. "The effect of income shocks on health behaviors: Evidence from a low-income country," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 257-276.

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    More about this item

    Keywords

    Lottery wins; Health care; Income elasticity; Public-private;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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