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Is health care really a luxury? A demand and supply approach

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  • Tiffany Hui-Kuang Yu
  • Hong Yih Chu

Abstract

Many studies have found strong and positive relationship between per capita income and health care expenditure. These studies usually adopt the assumptions that (1) the relationships among the variables are constant; and/or (2) the supply-side market for health care could be treated by using standard demand functions models. To take into account of the supply side of health care, we use the demand and supply approach with the cointegration model to re-examine this issue. By using Taiwan health care expenditure data, our results show that the real income elasticity is smaller than unity and the health care expenditures are primarily for 'curing' rather than 'caring'.

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  • Tiffany Hui-Kuang Yu & Hong Yih Chu, 2007. "Is health care really a luxury? A demand and supply approach," Applied Economics, Taylor & Francis Journals, vol. 39(9), pages 1127-1131.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:9:p:1127-1131
    DOI: 10.1080/00036840500461857
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    1. Fabrizio Iacone & Steve Martin & Luigi Siciliani & Peter C. Smith, 2012. "Modelling the dynamics of a public health care system: evidence from time-series data," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2955-2968, August.
    2. Nilgun Yavuz & Veli Yilanci & Zehra Ozturk, 2013. "Is health care a luxury or a necessity or both? Evidence from Turkey," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 5-10, February.
    3. Ousmane Traoré, 2020. "Economic Growth and Human Capital Accumulation across Countries: Evidence from WAEMU Region," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(2), pages 147-159, May.

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