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- Title
INCOME AND HEALTH SPENDING: EVIDENCE FROM OIL PRICE SHOCKS.
- Authors
Acemoglu, Daron; Finkelstein, Amy; Notowidigdo, Matthew J.
- Abstract
Health expenditures as a share of GDP in the United States have more than tripled over the past half-century. A common conjecture is that this is a consequence of rising income. We investigate this hypothesis by instrumenting for local area income with time series variation in oil prices interacted with local oil reserves. This strategy enables us to capture both partial equilibrium and local general equilibrium effects of income on health expenditures. Our central income elasticity estimate is 0.7, with 1.1 as the upper end of the 95% confidence interval, which suggests that rising income is unlikely to be a major driver of the rising health expenditure share of GDP.
- Subjects
UNITED States; MEDICAL care costs; PETROLEUM product sales &; prices; GROSS domestic product; ECONOMIC shock; INCOME
- Publication
Review of Economics & Statistics, 2013, Vol 95, Issue 4, p1079
- ISSN
0034-6535
- Publication type
Article
- DOI
10.1162/REST_a_00306