Econometric Models of Private and Public Health Expenditure in OECD countries, 1970-96

Maria-Carmen Guisan and Matilde Arranz

Applied Econometrics and International Development, 2003, vol. 3, issue 3, 49-60

Abstract: We analyse the evolution of Private Consumption on Health, having into account that there are substitution effects between public and private expenditure in OECD countries. From the analysis of the evolution of these variables our main conclusion is that the increase of expenditure on Health, with economic development, is generally positive for welfare and obeys to a rational behaviour of consumers. So we do not agree with the propositions and attempts to cut public expenditure on this important service which sometimes is made in the name of a kind economic efficiency that does not have into account, in the desirable degree, the quality of services and social welfare. We estimate some econometric models for private expenditure and the results confirm the existence of a high degree of substitution, what means that diminutions in public expenditure do not imply diminution in total expenditure on health but an increases in private one. The findings support a distribution between private and public expenditure, in order to guarantee general assistance of population, to get high standards of consumers welfare and to avoid abuses in demand.

JEL-codes: C5 C51 H51 H52 I1 I2 O51 O52 O57 (search for similar items in EconPapers)
Date: 2003
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