The relationship between health-care expenditure and disposable personal income: a panel econometric analysis on the EU countries
International Journal of Human Rights in Healthcare
ISSN: 2056-4902
Article publication date: 17 August 2021
Abstract
Purpose
When the factors affecting health expenditures are examined in the literature, it is seen that one of the most important factors is income. In this context, the purpose of this study is to investigate the relationship between out-of-pocket health expenditures and disposable personal income and revealing the income elasticity of health expenditures.
Design/methodology/approach
Therefore, short/long-term coefficients were obtained by analyzing Westerlund (2007) co-integration analysis and pooled mean group (PMG) regression methods for 22 European Union (EU) member states during the period 2003–2017. In addition, a comparison of the long-term coefficients for each country was obtained with augmented mean group (AMG) estimator.
Findings
The results of the AMG and PMG tests show that the long-term coefficients between disposable personal income and health expenditures are 0.83 and 0.97, respectively. These results imply that there is a significant relationship between the variables, and that health care should be categorized in the group of normal goods. However, the fact that the long-term coefficient is very close to 1, despite being classified in the category of necessity goods, requires more care to be taken in evaluating whether health services are luxury goods or necessity goods.
Originality/value
The use of second generation econometric tests on both cross-sectional dependence and heterogeneity demonstrates the value of the study. On the other hand, obtaining similar results by investigating the relationship between variables using different appropriate econometric models reveals the importance of the methodology used in this study. It reveals important details in terms of the literature regarding the long-term and short-term results obtained in this study.
Keywords
Acknowledgements
The authors would like to express their sincere gratitude to the anonymous reviewers who have enlightened them with their valuable comments. The authors’ appreciation goes to the jury members for their great assistance and to the research participants.Funding. This research did not receive any kind of grant from funding agencies in the public, commercial or not-for-profit sectors.Declaration of Competing Interest. The authors have no conflicts of interest to declare.
Citation
Özkaya, M.H., Alakbarov, N. and Gündüz, M. (2021), "The relationship between health-care expenditure and disposable personal income: a panel econometric analysis on the EU countries", International Journal of Human Rights in Healthcare, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHRH-04-2021-0103
Publisher
:Emerald Publishing Limited
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