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

Authors


Joan Costa-Font, Department of Social Policy, European Institute and LSE Health, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, UK.
E-mail: j.costa-font@lse.ac.uk

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.

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