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KMID : 1170320150210020071
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Korean Journal of Health Economics and Policy
2015 Volume.21 No. 2 p.71 ~ p.92
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Health Expenditure Model Using Grossman Model
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Kim Dae-Jung
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Abstract
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This paper analyzes the demand for health and demand for medical care using Korean Medical Expenditure Panel Data of 2009~2011. The underlying model is Grossman(1972)’s theoretical model, which look into the effects of socioeconomic variables on the demand. I apply the Wagstaff(1986)’s empirical methodology to the context of panel data. In particular, due to the censoring of health expenditure for certain individuals, I use the Two part model and Sample selection model which was developed in Wooldridge(1995). The estimation result shows that demand for health increases with income, education and decreases with age. Health habits such as smoking and drinking did not give expected sign, resulting probably from modeling problem. As for the demand for medical care demand, there was a positive influence of income, age and health habits(smoking, drinking) and negative effects of education on the demand. As for income, income effects seems offsets substitution effects for the medical demand care. Aging increases the health capital depreciation rate. To compensate it, people increases the medical care to maintain a certain health level. Finally, education increases the productivity of medical utilization, therefore medical care demand decreases for the given health level. In sum, socioeconomic variables had a consistent prediction with the theoretical model developed in Grossman(1972).
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KEYWORD
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Grossman, health demand, medical demand, Two part model, Sample selection model
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