Premium
Bayesian analysis of the two‐part model with endogeneity: application to health care expenditure
Author(s) -
Deb Partha,
Munkin Murat K.,
Trivedi Pravin K.
Publication year - 2006
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.891
Subject(s) - endogeneity , multinomial probit , medical expenditure panel survey , econometrics , economics , probit , gibbs sampling , bayesian probability , sample (material) , estimation , ordered probit , multinomial distribution , probit model , panel data , actuarial science , health care , health insurance , statistics , mathematics , chemistry , management , chromatography , economic growth
This paper studies the effect of managed care on medical expenditure using a model in which the insurance status is assumed to be endogenous. Insurance plan choice is modeled through the multinomial probit model. The medical expenditure variable, the outcome of interest, has a significant proportion of zeros that are handled using the two‐part model, extended to handle endogenous insurance. The estimation approach is Bayesian, based on the Gibbs Sampler. The model is applied to a sample of 20 460 individuals obtained from the Medical Expenditure Panel Survey. The results provide substantial evidence of selectivity. Copyright © 2006 John Wiley & Sons, Ltd.