Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260597 
Year of Publication: 
2022
Series/Report no.: 
Working Paper No. 413
Publisher: 
University of Zurich, Department of Economics, Zurich
Abstract: 
Previous evidence shows that better insurance coverage increases medical expenditure. However, formal studies on the effect of spending on health outcomes, and especially mental health, are lacking. To fill this gap, we reanalyze data from the Rand Health Insurance Experiment and estimate a joint non-linear model of spending and mental health. We address the endogeneity of spending in a flexible copula regression model with Bernoulli and Tweedie margins and discuss its implementation in the freely available GJRM R package. Results confirm the importance of accounting for endogeneity: in the joint model, a $1000 spending in mental care is estimated to reduce the probability of low mental health by 1.3 percentage points, but this effect is not statistically significant. Ignoring endogeneity leads to a spurious (upwardly biased) estimate.
Subjects: 
binary response
co-payment
copula
health expenditures
penalized regression spline
Rand experiment
simultaneous estimation
Tweedie distribution
JEL: 
I13
C31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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