Biases in the healthcare luxury good hypothesis?: a meta-regression analysis

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Abstract:

Summary. 

Although a growing literature examining the relationship between income and health expenditures suggests that healthcare is a luxury good, this conclusion is debatable owing to heterogeneity of the existing results. The paper tests the luxury good hypothesis (namely that income elasticity exceeds 1) by using meta-regression analysis, taking into consideration publication selection and aggregation bias. The findings suggest that publication bias exists, which is 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 estimates of income elasticity range from 0.4 to 0.8, which cast serious doubt on the validity of the luxury good hypothesis.

Keywords: Aggregate health expenditure; Healthcare; Income elasticity; Luxury goods; Meta-regression analysis; Regional health expenditure

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.1467-985X.2010.00653.x

Affiliations: 1: London School of Economics and Political Science, UK 2: Universitat de Barcelona, Spain

Publication date: January 1, 2011

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