The Price Elasticity of Demand for Pharmaceuticals amongst High Income Older People in Australia: A Natural Experiment

Peter Siminski

Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia

Abstract: This paper estimates the price elasticity of demand for pharmaceuticals amongst high-income older people in Australia. It exploits a natural experiment by which some people gained entitlement to a price reduction through the Commonwealth Seniors Health Card (CSHC). To the author’s knowledge, this is the first study of the price elasticity of demand for pharmaceuticals amongst older people that draws on a natural experiment with a control group. The preferred model is a nonlinear Instrumental Variable (IV) difference-in-difference regression, estimated on nationally representative repeated cross sectional survey data using the Generalised Method of Moments. No significant evidence is found for endogenous card take-up, and so cross-sectional estimates are also considered. Taking all of the results and possible sources of bias into account, the ‘headline’ estimate is -0.1, implying that quantity demanded is not highly responsive to price

Keywords: price elasticity; pharmaceuticals; Australia (search for similar items in EconPapers)
JEL-codes: D12 H42 I11 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2008
New Economics Papers: this item is included in nep-hea
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.uow.edu.au/content/groups/public/@web/@ ... ts/web/uow042786.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uow:depec1:wp08-02

Access Statistics for this paper

More papers in Economics Working Papers from School of Economics, University of Wollongong, NSW, Australia School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Peter Siminski ( this e-mail address is bad, please contact ).