Health Perception Biases and Healthcare Utilization in China: A Longitudinal Approach

Using panel data on over 17,000 adults from the China Health and Retirement Longitudinal Study (CHARLS), this paper investigates the role of health perception biases for healthcare utilization and related expenditure in China. We measure health perception biases as the difference between objective health outcomes from physical examinations and self-reported health. Leveraging the longitudinal dimension of the data, we address unobserved individual heterogeneity in the relationship between perception biases and healthcare use. We find that individuals who underestimate their health visit the doctor more often and have more hospital stays, while those who overestimate their health are less likely to use those healthcare services. Health perception biases are also strongly associated with total and out-of-pocket expenditures for both outpatient and inpatient care. Importantly, family support – especially the presence of co-resident sons – mitigates the tendency of those underestimating their health to seek more care, highlighting the role of family dynamics in healthcare decisions. Moreover, differences in China’s heterogeneous health insurance schemes appear to influence how health misperception translates into healthcare spending.