Ill Health and Its Potential Influence on Household Consumptions in Rural China

Harvard University, Cambridge, Massachusetts, United States
Health Policy (Impact Factor: 1.91). 11/2006; 78(2-3):167-77. DOI: 10.1016/j.healthpol.2005.09.008
Source: PubMed


Ill health is very expensive and could have significant impact on household consumptions. The purpose of this study is to examine the differences in household consumption patterns among households with or without ill health family member(s) in rural China. We also examine the opportunity cost of ill health by estimating the marginal effects of medical spending on consumption patterns. The data used in this study are from the baseline survey of a community-based rural health insurance study in a poor rural area of China conducted in 2002. The unit of analysis in this study is the household; 4553 households are included in this survey. Fractional Logit model is used as our prediction model. Ill health is measured by the presence of hospitalization and presence of diagnosed chronic disease(s) in a household. Findings from this study reveal that ill health and medical expenditure reduces household investment in human capital, physical capital for farm production, and other consumptions that are critical to human well-being. Subgroup analysis displayed that the impacts of medical expenditure on household consumption patterns described above are more significant in low-income households than in high-income households. In addition, the decline of the percentages of other consumptions is much larger for households with hospitalization than for households with chronic diseases.

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Available from: Hong Wang, Jan 23, 2014
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    • "Lastly, household economic status is measured by annual self-reported household expenditure in our study. Both self-reported household expenditure and household income data are available in the NHSS data; however, it is suggested that for developing countries expenditure data is a better proxy of household economic status than income data since the latter is likely to be under-reported[35]. Households were ranked according to per-capital household expenditure and grouped into five quintiles. "
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    • "In view of this problem, various alternative approaches have been suggested. Hermalin and Wallace (1994), Wang, et al. (2006), Pu, et al. (2008) and Yin, et al. (2010) use a probit or logit fractional specification for each of the deterministic components of (1). However, each equation is estimated individually, so predicted shares do not necessarily fall within the unit simplex, irrespective of deleting one equation from the system (the predicted share for equation  may be negative) or not (the predicted shares do not sum up to unity). "
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    • "Similarly, the effect on illness on consumption depends on the type of health problem and type of health service used. For example, Wang et al.[75] found that in China, the adverse effects on consumption due to hospitalization were considerably greater than if a member suffered from a chronic disease, but was not hospitalized. "
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