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Health Expenditures And Life Expectancy Around The World: A Quantile Regression Approach

Maksym Obrizan () and George L. Wehby
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George L. Wehby: University of Iowa

No 47, Discussion Papers from Kyiv School of Economics

Abstract: Previous literature has produced mixed results on the effects of country health expenditures on longevity. More importantly, all previous studies have evaluated the expenditure effects on the mean of the life expectancy distribution, ignoring the possibility that the expenditure returns may not be the same for countries that differ in their life expectancies. In this paper, we evaluate the heterogeneity in country health expenditure effects throughout the life expectancy distribution applying quantile regression to an assembled dataset of 177 countries. We find significant heterogeneities in expenditures effects on life expectancy that are completely masked by ordinary least squares (OLS), which underestimates (overestimates) the expenditure returns for countries ranking at low (high) life-expectancy quantiles. The largest returns from increased spending are for countries at the left margin of the life expectancy distribution (mainly at quantiles 0.25 and lower), for which a $100 increase in per capita spending leads to 11.5 and 11 months of life for males and females, respectively. The results suggest that increasing healthcare spending in these countries may have significant population-wide life expectancy returns.

Keywords: Health Expenditures; Life Expectancy; Quantile Regression (search for similar items in EconPapers)
JEL-codes: I1 C2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-hea
Date: 2012-01
Note: Revise and Resubmit to Health Economics
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http://repec.kse.org.ua/pdf/KSE_dp47.pdf January 2012 (application/pdf)

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