Do You Have to Win it to Fix it? A Longitudinal Study of Lottery Winners and Their Health Care Demand

34 Pages Posted: 30 Mar 2015

See all articles by Terence Chai Cheng

Terence Chai Cheng

University of Melbourne - Melbourne Institute of Applied Economics and Social Research

Joan Costa-Font

London School of Economics & Political Science (LSE)

Nattavudh Powdthavee

University of Warwick

Abstract

We exploit lottery wins to investigate the effects of exogenous changes to individuals' income on health care demand in the United Kingdom. This strategy allows us to estimate lottery income elasticities for a range of health care services that are publicly and privately provided. The results indicate that lottery winners with larger wins are more likely to choose private health services than public health services from the National Health Service. For high-income individuals without private medical insurance, the larger their winnings, the more likely they are to obtain private overnight hospital care. For privately insured individuals, the larger their winnings, the more likely they are to obtain private care for dental services and for eye, blood pressure, and cervical examinations. We find that medium to large winners (≥ £500) are more likely to have private health insurance. Larger winners are also more likely to drop coverage earlier, possibly after their winnings have been exhausted. The elasticities with respect to lottery wins are comparable in magnitude to the elasticities of household income from fixed-effect models.

Keywords: lottery wins, health care, income elasticity, public-private

JEL Classification: H42, I11, D1

Suggested Citation

Cheng, Terence Chai and Costa-Font, Joan and Powdthavee, Nattavudh, Do You Have to Win it to Fix it? A Longitudinal Study of Lottery Winners and Their Health Care Demand. IZA Discussion Paper No. 8908. Available at SSRN: https://ssrn.com/abstract=2586411

Terence Chai Cheng (Contact Author)

University of Melbourne - Melbourne Institute of Applied Economics and Social Research ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Joan Costa-Font

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://https://joancostaifont.org/

Nattavudh Powdthavee

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom
+44 (0)2476 528240 (Phone)

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