Sweet Cash: Is Healthcare a Normal Good for Women in Developing Countries?

Abstract

In this paper, we explore the little studied role of gender-based tastes and preferences in the empirical relationship between income and demand for health care. Based on a large body of evidence which suggests that the gender identity of the recipient of money can significantly influence allocation of resources within the household, we conjecture that an increase in women’s income may have interesting and unconventional effects on demand for healthcare. Using data from a high-frequency large nationally representative household survey in India, we exploit exogenous variation in women’s take-home salary incomes, generated by a change in the mandated rates of contribution to the employees’ provident fund, to estimate impacts on health care spending. We find that an increase in take-home salary of women is associated with a decrease in overall spending on healthcare expenses such as consultations and medications. While this could potentially be explained by improved health outcomes of women, we control for health-status and compare healthcare utilization at the intensive margin, i.e., conditional on hospital visits for seeking treatment, and find a similar negative correlation. We achieve this by supplementing our primary analysis using administrative data on hospital electronic medical records from a leading chain of eye hospitals in India. Our results using two novel datasets and examining decisions at the extensive and intensive margins suggest that women’s preferences for healthcare may be guided by various other factors, such as social and household norms, and therefore it is not obvious that estimated income elasticities of healthcare demand for women would always be positive, particularly in a developing country context.

Keywords: Health Expenditure, Cash in Hand, Gender Differences

JEL Classification: I11, I12, I14, I15