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Unobserved heterogeneity and censoring in the demand for health care
Author(s) -
LópezNicolás Angel
Publication year - 1998
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/(sici)1099-1050(199808)7:5<429::aid-hec358>3.0.co;2-u
Subject(s) - censoring (clinical trials) , economics , grossman , econometrics , health care , panel data , observability , consumption (sociology) , redistribution (election) , british household panel survey , demographic economics , public economics , economic growth , politics , political science , law , social science , mathematics , sociology , keynesian economics
In this paper we estimate a demand for private medical services equation based on the tradition of Grossman′s model of demand for health using data for a panel of Spanish households. The econometric specification accounts for the censored nature of the data, which arises from no participation and infrequency of purchases, and the existence of unobserved heterogeneity, which arises from the non‐observability of health states. Our evidence suggests that ignoring these features can have a significant impact on the size, sign and significance of the model estimates. The estimates for the participation and consumption processes also suggest that the deduction of expenditures on health care currently applicable in the Spanish tax system are positively associated to income and fertility. © 1998 John Wiley & Sons, Ltd.