Health care expenditures and income
Δαπάνες υγείας και ανάπτυξη
Αντωνιάδης, Χρήστος Α.
SubjectΥγεία -- Χρηματοοικονομική ανάλυση ; Δαπάνες, Δημόσιες ; Οικονομικά της υγείας ; Υγεία -- Κοινωνικές απόψεις ; Health economic ; Public expenditure
Over recent decades, the relationship between (real) per capita health care expenditure (HCE) and (real) per capita income (GDP) has become an issue of particular interest in the health economics literature. Over 90% of the observed variation in HCE can be explained by the variation in GDP and more importantly, the income elasticity of demand for health care is found to be greater than one, suggesting that health care is a luxury good rather than a normal one. In this study, we focus on the estimation of the income elasticity of the demand for health care for a sample of 19 OECD countries using data for the period 1970-2006. This paper contributes to the related literature by firstly extending the sample so as to cover the recent period and secondly, in contrast to previous research by employing not only Monte Carlo simulations but also a wide variety of asymptotically efficient cointegration estimators in order to reach more solid conclusions. Based on the single equation estimators, we would subscribe to health being a luxury good in the majority of countries, while the system-based JOH estimator points to health being a necessity. The dividing line is the FMLS estimator which suggests that health spending moves one-to-one with income.