Re-visiting the Health Care Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases?

Joan Costa-Font, Marin Gemmill and Rubert G

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: While a growing literature examining the relationship between income and health expenditures suggests that health care is a luxury good, this conclusion is contentiously debated due to heterogeneity of the existing results. This paper tests the luxury good hypothesis (namely that income elasticity exceed unity) using meta-regression analysis, taking into consideration publication selection and aggregation bias. The findings suggest that publication bias exists, a result that is robust to the meta-regression model employed. Publication selection and aggregation bias also appear to play a role in the generation of estimates. The corrected income elasticity estimates range from 0.4 to 0.8, which cast serious doubt on the validity of luxury good hypothesis. Nonetheless, due to the importance of aggregation, we cannot reject the luxury good hypothesis for aggregate time series data.

Keywords: meta-regression analysis; health care; luxury good; income elasticity; aggregate health expenditure; regional health expenditure (search for similar items in EconPapers)
JEL-codes: I1 I10 I11 I18 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Biases in the healthcare luxury good hypothesis?: a meta‐regression analysis (2011)
Working Paper: Re-visiting the health care luxury good hypothesis: aggregation, precision, and publication biases? (2009)
Working Paper: Re-visiting the Health Care Luxury Good Hypothesis: Aggregation, Precision, and Publication Biases? (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:09/02

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