Two-Part Multiple Spell Models for Health Care Demand

Posted: 20 Aug 2001

See all articles by J. M.C. Santos Silva

J. M.C. Santos Silva

University of Surrey

Frank Windmeijer

University of Bristol - Department of Economics; University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO); Institute for Fiscal Studies (IFS) - Centre for Microdata Methods and Practice

Abstract

The demand for certain types of health care services depends on decisions of both the individual and the health care provider. This paper studies the conditions under which it is possible to separately identify the parameters driving the two decision processes using only count data on the total demand. It is found that the frequently used hurdle models may not be adequate to describe this type of demand, especially when the assumption of a single illness spell per observation period is violated. A test for the single spell hypothesis is developed and alternative modelling strategies are suggested, including one that allows for correlated unobserved heterogeneity. The results of the paper are illustrated with an application.

Keywords: Count data, Generalised method of moments, Hurdle models, Non-parametric maximum likelihood estimator, Stopped-sum distributions

JEL Classification: C12, C13, C25, I10

Suggested Citation

Santos Silva, João M.C and Windmeijer, Frank, Two-Part Multiple Spell Models for Health Care Demand. Available at SSRN: https://ssrn.com/abstract=276962

João M.C Santos Silva (Contact Author)

University of Surrey ( email )

Guildford
Surrey GU2 7XH
United Kingdom

Frank Windmeijer

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

Institute for Fiscal Studies (IFS) - Centre for Microdata Methods and Practice

7 Ridgmount Street
London WC1E 7AE, WC1E 7 AE
United Kingdom

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