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Spurious correlation in estimation of the health production function: A note

Author

Listed:
  • Sule Akkoyunlu

    (Swiss Form for Migration and Population)

  • Frank R. Lichtenberg

    (Columbia University)

  • Boriss Siliverstovs

    (KOF Swiss Economic Institute)

  • Peter Zweifel

    (University of Zurich)

Abstract

In this paper, we address the issue of spurious correlation in the production of health in a systematic way. Spurious correlation entails the risk of linking health status to medical (and nonmedical) inputs when no links exist. This note first presents the bounds testing procedure as a method to detect and avoid spurious correlation. It then applies it to a recent contribution by Lichtenberg (2004), which relates longevity in the United States to pharmaceutical innovation and public health care expenditure. The results of the bounds testing procedure show longevity to be related to these two factors. Therefore, the estimates reported by Lichtenberg (2004) cannot be said to be result of spurious correlation, to the contrary, they very likely reflect an effective relationship, at least for the United States.

Suggested Citation

  • Sule Akkoyunlu & Frank R. Lichtenberg & Boriss Siliverstovs & Peter Zweifel, 2010. "Spurious correlation in estimation of the health production function: A note," Economics Bulletin, AccessEcon, vol. 30(3), pages 2505-2514.
    • Handle: RePEc:ebl:ecbull:eb-10-00138
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    References listed on IDEAS

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    Cited by:

    1. G Emmanuel Guindon & Paul Contoyannis, 2012. "A Response To Crémieux, Meilleur, Ouellette And Petit," Health Economics, John Wiley & Sons, Ltd., vol. 21(12), pages 1499-1501, December.
    2. Badi Baltagi & Francesco Moscone & Elisa Tosetti, 2012. "Medical technology and the production of health care," Empirical Economics, Springer, vol. 42(2), pages 395-411, April.
    3. Michele Sennhauser, 2009. "Why the Linear Utility Function is a Risky Choice in Discrete-Choice Experiments," SOI - Working Papers 1014, Socioeconomic Institute - University of Zurich.
    4. Massimiliano Piacenza & Gilberto Turati, 2014. "Does Fiscal Discipline Towards Subnational Governments Affect Citizens' Well‐Being? Evidence On Health," Health Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 199-224, February.
    5. Polk, Andreas & Schmutzler, Armin & Müller, Adrian, 2014. "Lobbying and the power of multinational firms," European Journal of Political Economy, Elsevier, vol. 36(C), pages 209-227.
    6. Cappellari, Lorenzo & De Paoli, Anna & Turati, Gilberto, 2014. "Do Market Incentives in the Hospital Industry Affect Subjective Health Perceptions? Evidence from the Italian PPS-DRG Reform," IZA Discussion Papers 8636, Institute of Labor Economics (IZA).
    7. Yia-Wun Liang & Wen-Yi Chen & Yu-Hui Lin, 2015. "Estimating a Hospital Production Function to Evaluate the Effect of Nurse Staffing on Patient Mortality in Taiwan: The Longitudinal Count Data Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 154-169, December.

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    More about this item

    Keywords

    Health; Life expectancy; Innovation; Pharmaceuticals; Health care expenditure; Cointegration;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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