Document Type

Dissertation

Date of Award

1978

Keywords

Medical care, United States, Mathematical models

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

E. Odgers Olsen

Second Advisor

Ronald Britto

Third Advisor

Clifford Kern

Abstract

This dissertation intends to examine the inconsistency prevailing in the health economics literature between theoretical predictions and empirical findings concerning the role of education in the determination of health care services. Starting from the premise that the household’s stock of health capital is a nondurable commodity which depreciates over time; that it can be augmented by investment; that the household production function for gross investment in health capital stock is homogeneous of degree one in both inputs of health care services and health care time; that a ‘factor-neutral’ education enters the production function of the household as an environmental variable in that it acts much like technological change in altering the productivity of the households in their nonmarket activities; and that the demand for health capital stock is inelastic with respect to the marginal product of health capital stock in the supply of healthy days, the theory predicts a negative impact of education on the demand for health care services while the empirical findings confirm a positive incidence of education on the demand for health care services.

There are basically two steps to examining this dilemma. The first consists in further investigating the assumptions of the theoretical investment model and studying the results which necessarily follow from a relaxation or alteration of these assumptions and determining the condition under which the theory would yield a positive correlation between education and the demand for health care while maintaining the assumption of inelastic demand for health stock. The second consists in a statistical analysis of the possible specification errors and violations of basic assumptions in the estimation of demand for health care services which could amount for the contradiction between theory and empirical verification.

The estimation of the household production function of healthy days, and the household production function of gross investment in health capital stock provides a test for the inelasticity of the demand for health capital stock schedule and to test for factor neutrality. Furthermore, the estimation of the household demand for health capital stock and demand for health care services was necessary to derive reasonable elasticities of money and time prices, and education and age elasticities. The reliability of these estimates was aided by two factors. Data from 2,699 households in five counties in New York and Pennsylvania states was used, and alternative specifications of the demand functions were estimated that demonstrated the consistency of the coefficients of time prices, money prices, education, age and other economic and demographic variables with the theoretical predictions.

Calculating the production and demand functions of the households brought to the fore the crucial importance of insurance and time prices and the relevance of education in the demand for dental care.

Chiefly, it is noted that the more educated households have a higher demand for dental care services, and that education in dental care biased while education played no meaningful role in the determination of demand for physician care services. It is also noted that time and money prices are relevant rationing devices in the determination of demand for dental and physician care services.

Download

Included in

Economics Commons

Share

COinS