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Effects of Informal Family Care on Formal Health Care: Zero-Inflated Endogenous Count for Censored Response

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  • Lee, M-J
  • Kim, Y-S

Abstract

Whether informal family health care is a substitute or complement for formal health care has been debated in the literature. If it is a substitute, then there is a scope to reduce formal health care cost by promoting informal family health care. Using Korean survey data for the elderly of age 65 or higher, this paper estimates the effect of informal family health care on formal health care, where the former is measured by the number of family health care givers and the latter is measured by the (logarithm of) formal health care expenditure. This task, however, poses a number of difficulties. The first is that the number of the family care givers is an endogenous count regressor. The second is that there seem to be too many zeros in the count (85%). The third is that the response variable also has a non-trivial proportion of zeros (14%). This paper overcomes these problems by combining a semiparametric estimator for a censored response with the idea of “zero-inflated†counts. The resulting two-stage procedure avoids strong parametric assumptions and behaves well computationally. Our main empirical finding is that informal family health care has a large substitute effect for diabetics that is statistically significant and large in magnitude, but the other effects are statistically insignificant for our given data size of about 3000

Suggested Citation

  • Lee, M-J & Kim, Y-S, 2011. "Effects of Informal Family Care on Formal Health Care: Zero-Inflated Endogenous Count for Censored Response," Health, Econometrics and Data Group (HEDG) Working Papers 11/10, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:11/10
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    References listed on IDEAS

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    1. Powell, James L, 1986. "Symmetrically Trimmed Least Squares Estimation for Tobit Models," Econometrica, Econometric Society, vol. 54(6), pages 1435-1460, November.
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    Cited by:

    1. Kevin E. Staub & Rainer Winkelmann, 2013. "Consistent Estimation Of Zero‐Inflated Count Models," Health Economics, John Wiley & Sons, Ltd., vol. 22(6), pages 673-686, June.

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    Keywords

    informal health care; formal health care; count variable; zero-inflated Poisson; control function approach; censored model.;
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