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Estimated Individual Income Elasticities
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In this paper, we investigate the potential threshold effects in the relationship between national expenditures on health care and national income. Using a panel threshold regression model, we derive country-specific and time-specific income elasticities for 17 OECD countries over the period 1975–2003. In contrast to many previous analyses, our emp...
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... a specification permits in addition to study the time variability of the estimated income elasticities of health care spending. On the Figure (1), the estimated elasticities e y it of health expenditure with respect to real income are plotted over the period 1975-2003 for the 17 countries of our sample. ...
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... Although the positive effect of income on health expenditure is very well documented in the empirical literature, there has been an ongoing debate regarding the size of the income elasticity of healthcare due to the mixed findings in the literature (Barati & Fariditavana, 2020). Some studies find that healthcare is a luxury good, estimating that income elasticity exceeds unity (Newhouse, 1977;Moore et al., 1992;Gerdtham et al., 1992;Roberts, 1999;Okunade & Murthy, 2002;Freeman, 2003;Hall & Jones, 2007) while some others estimate that health care is a necessity rather than a luxury (Wang, 2009;Moscone & Tosetti, 2010;Baltagi & Moscone, 2010;Chakroun, 2010;Baltagi et al., 2017;Rana et al., 2020;Apergis et al., 2020;Dubey, 2020;Casas et al., 2021). ...
This paper examines the dynamics between income and health spending in Türkiye from 1988 to 2020, employing autoregressive distributed lag (ARDL) and nonlinear ARDL (NARDL) methodologies. One of the key findings of this study is the presence of an asymmetric relationship between variations in income and overall healthcare expenditure. This means that changes in income levels do not have uniform effects on health expenditure, and the direction of these effects depends on whether income is rising or falling. Interestingly, the research reveals that both increases and decreases in income lead to a rise in total health expenditure. However, the impact of income declines on health expenditure is more pronounced. In other words, when people experience a decrease in income, they tend to allocate a larger portion of their reduced resources to health-related expenses. This highlights the significant financial strain that income reductions can place on individuals and households when it comes to healthcare costs. This pattern of asymmetric effects also extends to government or compulsory health expenditures. When income falls, the government's role in funding health expenses becomes more prominent, as individuals rely more on public healthcare services during economic downturns. Furthermore, the study sheds light on the intriguing relationship between income shifts and voluntary or out-of-pocket health expenses. Positive income shifts are found to be associated with a reduction in voluntary health expenditure. This suggests that as people experience an improvement in their financial situation, they may opt for less costly or more efficient healthcare services, leading to a decrease in out-of-pocket expenses. Conversely, when income levels decrease, individuals may find themselves with limited options, potentially resorting to more expensive private healthcare services or bearing a greater burden of out-of-pocket expenses. This finding underscores the financial vulnerability that can accompany negative income shifts.
... Moreover, income elasticity does vary by level of analysis with international income elasticities (OECD) being generally larger than national or regional studies (United States and Canada). From a panel threshold regression for 17 OECD countries over the period 1975-2003, Chakroun (2010 concludes that income elasticity of health care expenditure is less than one. Also, the relationship between health expenditure and income seems rather nonlinear and changes over time and across countries. ...
This paper provides empirical evidence on the relationship between per capita health care expenditure and national income in Benin, over the period from 1990 to 2020, using AutoRegressive Distributed Lag (ARDL) approach. After controlling for domestic government health expenditure as share of total health expenditure, foreign health expenditure as share of total health expenditure, proportion of population aged less than 15 years old and proportion of population aged over 65 years, we found that the long-run elasticity of health care with respect to gross domestic product is ranged from 0.529 to 0.676 suggesting that health care is income inelastic for Benin's citizens. Our results remain stable when re-estimating the same health expenditure equation by Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares methods. Since income elasticity of demand for health care expenditure is less than one, higher income may not automatically imply higher health expenditure by Benin population. La relation dynamique entre les dépenses de santé et le revenu national dans le contexte du Bénin. Résumé : Cet article fournit des preuves empiriques sur le lien entre les dépenses de santé par habitant et le revenu national à l'aide des données béninoises couvrant la période 1990-2020, et d'un modèle autorégressif à retards échelonnés (ARDL). Après avoir évalué la part des dépenses de santé du gouvernement dans les dépenses totales de santé, la part des aides extérieures en santé dans les dépenses totales de santé, la proportion de la population âgée de moins de 15 ans ainsi que celle âgée de plus de 65 ans, nos résultats montrent que les élasticités revenu à long terme des dépenses de santé varient de 0,529 à 0,676, ce qui suggère que les soins de santé sont inélastiques par rapport au revenu. Les résultats restent stables lorsque nous réestimons l'équation de dépenses de santé par les méthodes des moindres carrés ordinaires modifiés et des moindres carrés ordinaires dynamiques. L'élasticité-revenu de la demande de dépenses de santé étant inférieure à un, l'augmentation du revenu national ne se traduit pas automatiquement à travers une augmentation des dépenses de santé de la population béninoise. Mots-clés : Dépenses de santé-Bound testing-Financement de la santé-Bénin. JEL Classification : H51-I10-I15-O55.
... Literatürde yer alan görüşlerden farklı olarak negatif ilişki tespit edilmiştir ve bunu destekleyen görüşlerde bulunmaktadır. Chakroun (2010) çalışmasında, 17 OECD ülkesi kapsamında milli gelir ve sağlık harcamalarını 1975-2003 yılları verileriyle eşik regresyon modeline göre analiz etmiştir. Bulunan ampirik sonuçlara ise, sağlık harcamalarıyla gelir arasında doğrusal bir ilişkinin bulunmadığı yönündedir. ...
... Literatürde yer alan görüşlerden farklı olarak negatif ilişki tespit edilmiştir ve bunu destekleyen görüşlerde bulunmaktadır. Chakroun (2010) çalışmasında, 17 OECD ülkesi kapsamında milli gelir ve sağlık harcamalarını 1975-2003 yılları verileriyle eşik regresyon modeline göre analiz etmiştir. Bulunan ampirik sonuçlara ise, sağlık harcamalarıyla gelir arasında doğrusal bir ilişkinin bulunmadığı yönündedir. ...
Toplumun gelişmesi ve ilerlemesinde insan sağlığının önemi yadsınamazdır. Sağlığın çoğunlukla kamusal nitelikte olduğu düşünüldüğünde, bireylerin sağlığına önem verilmesi ve korunmasıyla toplumlar sağlıklı nesil yetiştirecek, bilinç düzeyi artacak ve refah seviyesi yükselecektir. Bireye yapılan bu yatırımların hepsi sağlık harcamalarından geçmektedir. Bu çalışmanın amacı sağlık harcamalarının makroekonomik göstergelerle ilişkisini kapsamlı bir şekilde ortaya koymaktır. Bu çerçevede, seçilen ülkeler AB üyeliğine sahip 2019 yılı GSYİH değeri en yüksek 5 ülke; Almanya, Fransa, Hollanda, İtalya, İspanya olarak belirlenmiştir. Makroekonomik göstergelerden, gayri safi yurt içi hasıla, kişi başına gayri safi yurt içi hasıla, tüketici fiyat endeksi, sanayi üretim endeksi, büyüme oranı, işsizlik ve işgücüne katılım oranı bağımsız değişkenlerdir ve ilgili veriler 1992-2019 yılını kapsamaktadır. İlgili değişkenlerle 7 model kurulmuştur. Panel veri analiz yöntemine göre; Durağanlık Analizi, Yatay Kesit Bağımlılığı Testi, Toda-Yamamoto Nedensellik Testi ve AMG Tahmincisi uygulanmıştır. Çalışmadan elde edilen bulgular ışığında, Türkiye’nin de içerisinde bulunduğu 6 ülkede sağlık harcamalarında meydana gelen artıştan en çok etkilenen değişken gayri safi yurt içi hasıladır ve negatif olarak etkilendiğini söylemek mümkündür. Yalnızca Türkiye’de sağlık harcamalarının tüketici fiyat endeksi üzerinde etkisi anlamlı ve pozitiftir.
... This study uses panel data regression models and the following proxies to measure innovation: R&D spending, number of researchers, number of patents, number of mergers and acquisitions, GDP growth, percentage of education expenditure in GDP, percentage of Foreign Direct Investments (FDI) in GDP, and unemployment rate. Furthermore, in [14] it was seen that healthcare is a necessity rather than a luxury and that the relationship between health expenditures and income is nonlinear, using a panel data regression model. In addition, the focus of the policy advice in [15], like it was previously seen for [9], is on the productivity, rather than on the amount of investment. ...
... Their main results and discussion will be left for the following section. [13] 1960-2020 Pordata Number of new dwellings [3] 1995-2020 Pordata Tax revenue (M€) [15] 1972-2020 Pordata Expenses in health (M€) [14] 1972-2020 Pordata Deficit/surplus (M€) [8] [10] [15] 1964-2020 Pordata CO2 emissions (thousand tons) [2] [5] [17] 1988-2020 Worldometer Divorce rate (%) [23] 1960-2020 Pordata External debt (M€) ...
In this work, we predict the Portuguese Gross Domestic Product using three different computational techniques: Principal Component Analysis, Confirmatory Factor Analysis, and Random Forest. We start by reviewing the literature on the topic and defining the variables motivated by the literature, and then study the viability of such models in our data set. The models are described and compared, and our conclusion is that all three models are viable, under certain assumptions and preprocessing of the data, although all have upsides and shortcomings.
... However, this may partly be due to the aging of the population, giving rise to higher health-care needs simultaneously with income growth. Chakroun [34] finds that it may so be and that controlling for this factor, the income elasticity is slightly below unity for most OECD countries. Another study with a similar finding is Acemoglou, Finkelstein and Notowidiglo [35] that uses an instrument-variable approach and reports a central-value estimate for this parameter at 0.7. ...
Results from economic evaluations of long-term outcomes are strongly dependent on the chosen discount rate. A recent review of national guidelines for evaluation of healthcare interventions finds that “the level of currently used discount rates seems relatively high in many countries”. However, this conclusion comes from a comparison to rates derived or observed for investments in safe assets, while rate of return requirements are typically considerably higher when investment involves risk. This paper reviews recent literature on how to account for project-specific risk in determination of the social rate of discount and discusses implications for economic evaluation of healthcare interventions. It concludes that the available empirical evidence strongly suggests that the demand for and consumer value of health and healthcare is co-variant with income, which therefore implies that there is a non-diversifiable risk component of health-related investment.
... Notwithstanding several weaknesses in the panel data, Parkin, et al., (1987) offered improved results supporting the luxury good argument. On the contrary for similar data set some studies estimated the income elasticity lower than the unity (Sen, 2005;Dregen & Reimers, 2005;Chakroun, 2010;Baltagi & Moscone, 2010 and Carter (1997) observed that in case of majority of the countries the null hypothesis of income elasticity equal to unity could not be rejected. Similar result was obtained by Narayan, et al., (2011) for some countries among OECD. ...
Botswana has always been recognised as an economically stable and upper middle income country in Sub- Sahara Africa, very often celebrated as a model economy for its prudential fiscal management. In 2009 Botswana become one of the few countries which have met the Abuja targets in per capita health expenditure. Amidst a high literacy rate and reasonably high economic growth, health expenditure being the highest among the SADC countries, Botswana has the HIV/AIDS prevalence which is one of the highest in the African continent. A stable relationship between health expenditure growth and income growth is crucial for health policy formulation. Four issues associated with health expenditure in the estimation of income elasticity which have not been adequately addressed in earlier studies are role of technology, heterogeneity of the health expenditure, treatment of structural break and dynamic aspects of health expenditure. This paper attempts to address these issues while estimating the income elasticity of health expenditure for Botswana considering both macro-data for 1981-2016, and micro-data drawn from the Household Income Expenditures Surveys, 1993/94 and 2003/04 according to residence status. Our results for Botswana indicate that the health care is a necessity at least in the short run. This is in contrast to the available evidence for other countries especially among upper middle income and in Africa.
... If the null hypothesis is rejected, the alternative one which tells FEM can be applied for the relationship should be accepted and the regression estimated by FEM will be as below: As the Hausman test also shows that null hypothesis indicating REM can be applied can't be rejected, the relationship between income per capita (natural logarithm) and health expenditure share Heshmati [12], OECD and the World Bank [14], Chakroun [15], Yumuşak and Yıldırım [16], Eriğit., et al. [20], Yardımcıoğlu [21], Deloitte and Yased [23], Lago-Penas., et al. [24], Kurt [11], Aydemir and Baylan [26], Hayaloğlu and Bal [27], Bedir [28], Başar., et al. [29] have found positive relationship between HEXP and economic growth. ...
Background: Labour force, which is one of the main factors of production function with capital input in traditional economic growth.
... In the same disposition, Lago-Penas et al. (2013) emphasized their argument from both sides by showing that healthcare in the past studies has been established to be both a "luxury" good with an income elasticity greater than one (Liu, et al., 2011;Mehrara, et al., 2010;Getzen, 2006;Parkin, et al., 1987;Leu, 1986;Newhouse, 1977;Moscone, & Tosetti, 2010), this cluster of literature stressed on determining the magnitude of income elasticity of healthcare expenditure, and the policy implications for the financing and conveyance of healthcare resources. On the other hand, some literature established that healthcare is a "necessity" with an income elasticity less than one (Baltagi & Moscone, 2010;Chakroun, 2009;Sen, 2005;Gerdtham et al., 1998;Gerdtham, 1992;Khan et al., 2016;Baltagi et al., 2017). Likewise, the authors acknowledged some studies (such as Gerdtham, 1992;Hitiris & Posnett, 1992) which suggested that the income elasticity for government healthcare expenditure could be near to one. ...
The foremost impact of healthcare system is for the individuals to have the right and privileges to access enhanced healthcare services. The demand for health, innovation and sustainable healthcare systems has also been gaining better prominence and consideration in numerous countries, and it is perceived as one of the major contributors to the economic growth and development. This paper looks at the dynamic drivers of healthcare expenditure in Organisation of Islamic Cooperation (OIC) countries from 1990 to 2015. The dynamic panel system Generalized Method of Moments (GMM) technique was used for the study analysis. The findings show that the income, life expectancy, share of population between the age group of 65 years and above, share of population age under 15 years, out-of-pocket payment, research and development (technology) in healthcare and consumer price index were the drivers of healthcare expenditure in OIC countries. In view of this, the study differs from recent and previous studies, because the study offers novel empirical findings as the income per capita is above one, which is about 1.90 and inelastic. This proves that healthcare in OIC countries is a luxury goods.
... 412-427 G. Şantaş, B. Demirgil, F. Şantaş Doi: http://dx.doi.org/10.11611/yead.499099 Yönetim ve Ekonomi Araştırmaları Dergisi / Journal of Management and Economics Research 414 ilişkiye yönelik ampirik çalışmaların mevcut olduğu görülmektedir (Gerdtham vd., 1992;Chakroun, 2010;Aksoğan ve Elveren, 2012;Martinez-Vazguez vd., 2014;Akbulut, 2015;Baltagi vd., 2017). Ancak Türkiye'de bu konuda yapılan çalışmaların sayıca kısıtlı olduğu söylenebilir. ...
Bu çalışma, Türkiye’de sağlık harcamalarının gelir dağılımı üzerindeki etkisinin incelenmesi amacıyla gerçekleştirilmiştir. Çalışma, 1980-2017 dönemini kapsamaktadır. Çalışmada Gini katsayısı bağımlı değişken ve kamu sağlık harcamalarının GSYH’ye oranı ise bağımsız değişkendir. Çalışmada seriler arasında eşbütünleşme ilişkisi bulunduğu belirlenmiştir. ARDL sınır testi yaklaşımına göre, kamu sağlık harcamalarında meydana gelen %1’lik bir artış, uzun dönemde Gini katsayısını %0,03 oranında azaltmaktadır. Toda Yamamoto nedensellik testine göre sağlık harcamalarından gelir dağılımı eşitsizliğine doğru bir nedensellik ilişkisi bulunmaktayken gelir dağılımı eşitsizliğinden sağlık harcamalarına doğru bir nedensellik ilişkisi bulunmadığı belirlenmiştir.
