Health as an unobservable: A MIMIC-model of demand for health care

Wynand P.M.M. Van de Ven*, Jacques Van Der Gaag

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

35 Citations (Scopus)
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Abstract

This paper develops a model to analyze the demand for health care. It differs from current practice in that (1) it deals explicitly with the complex relation between income, health, health insurance, and the demand for health care, and (2) 'health' is treated as an unobservable variable. We present the Maximum Likelihood estimates of an eleven-equation, simultaneous, multiple-indicator, multiple-causes (MIMIC) model, containing two simultaneously determined unobservables and, in total, nine 'indicators'. Data used stem from a health-care survey among 8000 households in The Netherlands. The results show, among other things, that health and permanent income have mutual, positive impacts. Both age and education have important direct and indirect (via permanent income) effects on health. The estimated impact of the availability of health care on individual demand confirms similar results based on aggregated data.

Original languageEnglish
Pages (from-to)157-183
Number of pages27
JournalJournal of Health Economics
Volume1
Issue number2
DOIs
Publication statusPublished - Aug 1982

Bibliographical note

Funding Information:
*An earlier version of this paper has been presented at the European Meeting of the Econometric Society, Athens, 1979.T he research reported here was financed by a grant from the Sick Fund Council, The Netherlands. The authors wish to thank the health insurance company Hc,t Zilueren Kruis for making available the data that were used. Useful suggestions on a previous version by Arthur S. Goldberger, Michael Grossman, Joseph P. Newhouse and an anonymous referee are gratefully acknowledged. Only the authors are responsible for any remaining error.

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