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Econometrics

Final Exam – Microeconometric Part

ARE EDUCATION LEVEL AND SPORTS ACTIVITIES DETERMINANTS OF HEALTH CARE UTILIZATION IN GERMANY? AN ECONOMETRIC APPROACH WITH A HURDLE MODEL

By Italo Arbulú Villanueva

January 2010

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INDEX

1. INTRODUCTION....................................................................... 3 2. LITERATURE REVIEW ............................................................. 4 2.1. The Grossman Model ............................................................. 4 2.2. The Zweifel Model .................................................................. 6 3. ECONOMETRIC SPECIFICATION ........................................... 8 3.1. The Hurdle Specification ...................................................... 10 4. DATA ...................................................................................... 12 5. RESULTS ............................................................................... 15 6. MAIN CONLUSIONS .............................................................. 23 7. BIBLIOGRAPHY AND SOURCES .......................................... 25

2 ECONOMETRICS – Microeconometric Final Exam Arbulú Italo Raul A. Arbulú Villanueva

1. INTRODUCTION This paper models the demand for health services in Germany measured as the number of visits to a doctor. At the present time, it is important to understand the decisionmaking process to obtain a better evaluation of the socioeconomic forces that cause the increase in health care utilization (POHLMEIER and ULRICH, 1995).

Germany has a highly state-financed health-care system like most nations, and subsequently the results obtained with this work will be appropriate to use in other countries with policy purposes. Specifically, this work seeks to determine if citizens actively engaged in sports and the level of education are driven forces in the health service demand.

Having a clear idea of both, health care demand determinants and the magnitude of their effects will help to give some advices to public authorities in order to achieve a healthier society.

In the Health Economics literature the first health care demand model was formulated by GROSSMAN (1972). It is based on the traditional consumer theory and considers the individual as a sole agent or a prime decision maker in the process of health care utilization. The second approach of this process is to assume that the demand for health services is made in two stages: the contact decision and the intensity of use decision. This model developed by ZWEIFEL (1981) is based on the principal-agent framework.

This work will take into account these two approaches through the use of specific instruments, in this sense, the Hurdle Model is appropriate for the purpose of this study.

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2. LITERATURE REVIEW The theoretical approaches capable of application to the analysis of health care utilization are two: (i) The traditional consumer theory (Grossman, 1972), which considers the individual as the primary agent to determine the demand for health services, but conditioned by the organization of the health system and, (ii) principalagent models, in which the physician as agent of the patient, determines the amount of medical services used on behalf of the patient (principal) once it has produced the first visit. (Zweifel, 1981).

The contribution of Pohlmeier and Ulrich (1995) is the combination of both approaches to tackle the demand for health services as a process consisting of two stages.

2.1.

The Grossman Model

Grossman (1972) presents a model as a result of his concern about the demand for health services and the distinction between the concepts of health and medical services, considering the first as a basic good in consumer demand, while medical services are inputs, the result of a derived demand, to produce more health.

Grossman believes that each individual tries to maximize an inter-temporal utility function, based on a set of consumer goods Zt, and the total consumption of "health services", ht, understood as the time variable produced by healthy level health, Ht:

The stock of health changes over time depending on the investment It, and the rate of depreciation of health δt, as shown by the following relationship:

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Consumers can be considered as producers of those services that increase their utility levels, buying inputs from the market, and combining them with their own time. These production functions are expressed as:

where M is a vector of inputs that, according to Grossman, contribute to the gross investment in health care; TH is the time taken to improve health; X are market inputs for the production of good Z, T represents the free time spent on produce those goods, and E is the exogenous level of education, which operates as an efficiency factor in the production function.

The consumer faces two constraints: time and budget constraints. As regards the first, the total amount of time ( t) is divided into time spent on: production of health (THt) and other assets (Tt), work (TW t) and time lost due to illness (TSt). Regarding to the second constraint, that income must match the costs they incurred for the production of health and other goods:

where ptx y ptm are prices of inputs X and healthcare M, respectively, wt is the wage rate per hour, i is the interest rate for present value, and A0 is the discounted value of unearned income (non-labor income) or endowments.

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The quantities of balance between goods Ht and Zt are obtained by maximizing the function utility and production functions subject to the restrictions already mentioned. The optimal value is reached when the marginal benefits are equal to the marginal costs of gross investment in health. It is expected that wage increases lead to an increase of income realized by healthy days that will encourage individuals to invest more in health care and demand more health care services. The price of health services will have special significance in the demand for private services, so that increasing them will have negative effects on consumption. In the case of analyzing public health systems demand, the price is replaced by variables representing the cost of time or access.

With respect to education, people with more education increases the marginal product of the inputs used and, therefore, reduce the necessary amount of them to produce the same amount of health. On the other hand, the age will reduce the health status and, consequently, increase medical costs.

2.2.

The Zweifel Model

The economic model of physician behavior developed by Zweifel (1981), unlike the Grossman Model, is characterized by the fact that is the physician, as agent of the patient, who determines the necessary amount of health services on behalf of the patient (principal) once it has produced the first visit.

This model states that the physician not only determines the treatment according to clinical and ethical criteria (I), but also stems from economic incentives, such as income (Y) or leisure (L). The utility function is represented by the following expression:

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Where “s” is an unknown parameter that represents the average level of symptoms. While it is difficult to specify conduct that would constitute an unethical behavior, this is set (approximated) according to whether the compensation in terms of income and leisure is large enough. Note that only the demand for first visits is under the control of patients. Once the first contact occurs, the physician is free to choose the number of visits, either by visits of longer or shorter duration, or varying the frequency of the visits on patient or refer the patient to another level of assistance.

The usefulness of this theoretical model for empirical applications is specified in separate analysis of the use, depending on whether a decision taken by the patient or determined by the healthcare professional in accordance with that agency relationship.

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3. ECONOMETRIC SPECIFICATION Count data models represent a natural starting point for estimating the demand for health services, measured as the number of visits to the doctor during a given time interval.

Unlike more popular approaches for qualitative endogenous variables such as logit and probit, count data approaches assume a dependent variable resulting from a discrete probability function. For our specific application this implies that we are mainly interested in an explanation of the number of visits to a doctor per se.

A widely used count data model is based on the Poisson distribution. This model can be characterized by a single parameter, implying the equality of the conditional mean and the conditional variance. However, the equidispersion property turns out to be too restrictive for most empirical applications. In the following, we assume that our dependent variable stems from a negative binomial data generating process.

Assuming a random variable Y, which can take only nonnegative integer values, the probability that exactly y counts are observed is given under the Poisson assumption by:

The negative binomial distribution for Y can be derived as a compound Poisson process where the parameter “λ” of the Poisson distribution is specified as a gamma distributed random variable:

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Integration over “λ” yields the negative binomial distribution for Y (see Cameron and Trivedi 1986):

Since “Φ” and “v” are positive it is clear that the variance exceeds the mean. Hence, the model allows for overdispersion, a fact that characterizes many data sets. This model has been used by Cameron et al. (1988) to explain the number of visits to the doctor, number of hospital admissions, days of stay and number of drugs consumed in Australia; Pohlmeier and Ulrich (1995) have applied this model to analyze the number of visits to general practitioners and specialists in Germany; and Gerdtham (1997) used the model to analyze medical visits and weeks of hospital stay in Sweden.

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3.1.

The Hurdle Specification

Health economic considerations suggest that the decision to contact a doctor and the decision about the length of treatment are based on different decision-making processes, since the contact decision solely depends on the individual, while the frequency of visits also reflects the supply of health services given by the doctor.

The main attractiveness of this model is given in part by a fundamental characteristic of the demand for health care services, which is the high percentage of non-use. In addition to its connection with the principal-agent models (Zweifel, 1981), in which the doctor ( agent) determines the utilization on behalf of the patient (principal) once the initial contact has been made.

The contribution of Pohlmeier and Ulrich (1995) to empirical modeling lies in the consideration of decision making as a two-step process. The first is the patient who decides to visit the doctor but once the doctor comes in, it is he who determines the intensity of treatment in the second stage.

The two-part models distinguish between "users" and "non-users" of the health service. The "non-users" are those that show a zero use in the study period. In this context, the first stage models the division between "non-users" (zero) and "users" (positive) based on binary regression models, this means that at this stage estimates the probability of accessing the service.

The second stage models the use or frequency for those with a positive level of use by employing a model "count data" for truncated data. The structure of the models in two parts is applied to both discrete and continuous variables. When applied to the first kind of variables, the model is often called "Hurdle model."

A Hurdle model suggests that the processes generating the zeros (not going to the doctor) and positive values (visit the doctor) are different. The model combines the zeros of a distribution function with positive values of another distribution function.

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In this work we use to model the first stage a probit model and, for the second stage, the negative binomial model with truncated data (positive values).

The specification of the two processes of decision is made with the same explanatory variables, but the results must be interpreted differently, depending on the stage. The likelihood function for this model is expressed:

The first factor is estimated using a binomial probability model and indicates that there is no any contact with health services. The first term of the second factor represents the probability of making one or more visits, while the ratio measures the likelihood that a positive event occurs conditional on the completion of a contact.

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4. DATA Our data source is the German Socioeconomic Panel Survey (SOEP) realized in 1999. The SOEP is a household based study which started in 1984 and which reinterviews adult household members annually. The annual surveys are conducted by the German Institute for Economic Research (DIW Berlin). The survey is funded by the German Federal Government and the State of Berlin via the Bund-Länder Commission for Educational Planning and Research Promotion

The size of the sample is 6,231 individuals. The survey was conducted by direct interviews. The dependent variable of our study is the number of visits to a doctor in the three months before the interview.

The panel includes a wide range of micro- level information on socioeconomic characteristics of individuals and households, including specific variables on working and living conditions as well as variables on health conditions and health care utilization.

The variables are shown in the following tables which contains the definition and a summary of the main statistics of those variables.

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Data organization doctco age male educ married hsize sport goodh badh sozh loginc ft pt unemp winter spring fall doctcod age2 number of doctor visits in last three months age in years male = 1; female = 0 years of schooling married = 1; otherwise = 0 number of people living in household actively engaged in sports = 1; otherwise = 0 good health (self assessment) = 1; otherwise = 0 bad health (self assessment) = 1; otherwise = 0 individual receives welfare payments = 1; otherwise = 0 logarithm of monthly gross income full time work = 1; otherwise = 0 part time work = 1; otherwise = 0 unemployed = 1; otherwise 0 interview in winter quarter = 1; otherwise = 0 interview in spring quarter = 1; otherwise = 0 interview in fall quarter = 1; otherwise = 0 1 = did visit doctor in last three months; 0 otherwise. age - squared

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VARIABLE Mean Median Maximum Minimum Std. Dev. Skewness DOCTCO 2.39 1.00 60.00 0.00 3.94 4.98 AGE 38.92 37.00 60.00 20.00 11.23 0.27 MALE 0.47 0.00 1.00 0.00 0.50 0.14 EDUC 11.33 11.00 18.00 7.00 2.36 0.94 MARRIED 0.65 1.00 1.00 0.00 0.48 -0.62 HSIZE 3.09 3.00 11.00 1.00 1.33 0.73 SPORT 0.27 0.00 1.00 0.00 0.44 1.06 GOODH 0.58 1.00 1.00 0.00 0.49 -0.32 BADH 0.13 0.00 1.00 0.00 0.34 2.21 SOZH 0.03 0.00 1.00 0.00 0.18 5.25 LOGINC 6,982,553.00 7,476,104.00 9,420,332.00 8.57 1,878,661.00 -2.91 FT 0.54 1.00 1.00 0.00 0.50 -0.15 PT 0.11 0.00 1.00 0.00 0.32 2.42 UNEMP 0.07 0.00 1.00 0.00 0.26 3.23 WINTER 0.32 0.00 1.00 0.00 0.47 0.79 SPRING 0.53 1.00 1.00 0.00 0.50 -0.13 FALL 0.01 0.00 1.00 0.00 0.12 8.44 DOCTCOD 0.65 1.00 1.00 0.00 0.48 -0.65 AGE2 1640.81 1369.00 3600.00 400.00 915.65 0.64

Kurtosis 45.18 1.99 1.02 4.38 1.39 4.37 2.12 1.10 5.89 28.58 10.05 1.02 6.88 11.45 1.62 1.02 72.19 1.42 2.26

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5. RESULTS The first equations (first-stage decision) which represent the decision process made by the principal (patient) to visit the doctor were estimated through a probit model, the following table shows the results.

Dependent Variable: DOCTCOD Method: ML - Binary Probit (Quadratic hill climbing) Date: 01/17/10 Time: 02:05 Sample: 1 6231 Included observations: 6231 Convergence achieved after 12 iterations Covariance matrix computed using second derivatives Variable C AGE AGE2 EDUC MARRIED HSIZE SPORT GOODH BADH SOZH LOGINC FT PT UNEMP WINTER SPRING FALL Mean dependent var S.E. of regression Sum squared resid Log likelihood Restr. log likelihood LR statistic (16 df) Probability(LR stat) Obs with Dep=0 Obs with Dep=1 Coefficient 1.203106 -0.026998 0.000328 0.014512 0.122406 -0.064512 0.116645 -0.488356 0.559279 0.016492 6.55E-09 -0.275771 0.011880 -0.297365 -0.027029 0.015579 0.340272 0.653988 0.456797 1296.633 -3747.709 -4018.639 541.8595 0.000000 2156 4075 Std. Error 0.252049 0.012675 0.000155 0.007462 0.043448 0.014172 0.039531 0.039590 0.067412 0.098910 9.01E-09 0.042508 0.062702 0.070312 0.054082 0.050587 0.162125 z-Statistic 4.773301 -2.129953 2.116699 1.944741 2.817321 -4.552100 2.950688 -12.33530 8.296379 0.166736 0.727023 -6.487591 0.189468 -4.229238 -0.499779 0.307972 2.098821 Prob. 0.0000 0.0332 0.0343 0.0518 0.0048 0.0000 0.0032 0.0000 0.0000 0.8676 0.4672 0.0000 0.8497 0.0000 0.6172 0.7581 0.0358 0.475735 1.208380 1.226762 1.214751 -0.601462 0.067418

S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Avg. log likelihood McFadden R-squared

Total obs

6231

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As we can appreciate in the table, the McFadden R-squared is very low (0.067), this means that the variables included in the model are not enough to explain the probability of visiting the doctor. In this sense, there are other variables that should be taken into account but are not included on the survey, for example, the fact that the individual has a private health insurance. The second equation (second-stage decision) represents the decision process made by the agent (doctor) about the number of necessary visits that the principal (patient) should do. This model was estimated through a count data model which used a negative

binomial distribution, the following table shows the results. It is important to remember that in count data models, in which the dependant variables takes integers positive values, the most useful methods to estimate the coefficients are the use of the Poisson distribution and the negative binomial distribution. However, the use of Poisson distribution imposes some restrictions; the most important restriction is the equality of the (conditional) mean and variance. However, this assumption is often violated in empirical applications. When this his restriction does not hold, it is better to use the negative binomial distribution.

E-Views estimate the logarithm of the measure of the extent to which the conditional variance exceeds the conditional mean, and labels this parameter as the "SHAPE" parameter in the output. Therefore, is this parameter is statistically equal to zero (accept the null hypothesis) the Poisson distribution should be used; otherwise, the negative binomial distribution would be a better choice.

As we can see in the estimation output of the second stage, the parameter SHAPE is statistically different from zero; this means that the choice of the negative binomial distribution was a correct choice in order to estimate the number of visits to the doctor.

It is important to consider that in this regression the adjustment coefficient (measured by the Pseudo-R2) is also low (0.24) which also leads to the conclusion that the number of visits to the doctor have other determinants that maybe are not related with

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socioeconomic variables but to variables related with the necessary treatment of the patient (for example, a patient with flu should have less number of visits than a patient whit a broken leg or heart diseases).

Dependent Variable: DOCTCO Method: ML - Negative Binomial Count (Quadratic hill climbing) Date: 01/16/10 Time: 19:56 Sample: 1 6231 IF DOCTCOD=1 Included observations: 4075 Convergence achieved after 12 iterations Covariance matrix computed using second derivatives Coefficient C AGE AGE2 EDUC MARRIED HSIZE SPORT GOODH BADH SOZH LOGINC FT PT UNEMP WINTER SPRING FALL 1.563108 0.003744 -4.73E-05 -0.013015 0.023284 -0.042016 0.023491 -0.349505 0.605303 0.139548 5.45E-09 -0.175504 -0.225013 -0.153783 0.009389 -0.023857 0.013600 Std. Error 0.197797 0.009606 0.000115 0.005733 0.033088 0.011141 0.030199 0.030214 0.035395 0.070566 6.87E-09 0.031013 0.044650 0.053371 0.041715 0.039093 0.106748 z-Statistic 7.902606 0.389800 -0.410315 -2.270132 0.703712 -3.771298 0.777874 -11.56781 17.10127 1.977549 0.793319 -5.659066 -5.039540 -2.881392 0.225063 -0.610246 0.127406 Prob. 0.0000 0.6967 0.6816 0.0232 0.4816 0.0002 0.4366 0.0000 0.0000 0.0480 0.4276 0.0000 0.0000 0.0040 0.8219 0.5417 0.8986

Mixture Parameter SHAPE:C(18) R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood Restr. log likelihood LR statistic (17 df) Probability(LR stat) -1.023684 0.140521 0.136920 4.066006 67071.97 -9134.192 -12072.05 5875.716 0.000000 0.035730 -28.65024 0.0000 3.655706 4.376656 4.491873 4.519757 4.501748 -2.241519 0.243360

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Avg. log likelihood LR index (Pseudo-R2)

17 ECONOMETRICS – Microeconometric Final Exam Arbulú Italo Raul A. Arbulú Villanueva

In order to examine the marginal effects of a variable, we must examine the change in the unconditional medical visits mean given a change in an explanatory variable which is:

The first part of the previous equation is the change in the conditional mean of medical visits weighted by the probability of making a visit to the doctor and the second part is the change in the probability of taking a non-zero health care demand weighted by the conditional mean of medical visits. The following chart shows the marginal effects for the first stage (probit model), the second stage (count data model using a negative binomial distribution) and for the whole estimation (Hurdle model). Marginal Effect of Explanatory Variables

Variable C AGE AGE2 EDUC MARRIED HSIZE SPORT GOODH BADH SOZH LOGINC FT PT UNEMP WINTER SPRING FALL PROBIT 0.784296 -0.017600 0.000214 0.009460 0.079795 -0.042055 0.076040 -0.318356 0.364590 0.000000 0.000000 -0.179773 0.000000 -0.193850 0.000000 0.000000 0.221821 NEG-BIN 7.461712 0.000000 0.000000 -0.011233 0.000000 -0.036992 0.000000 -0.293832 0.673028 0.140180 0.000000 -0.160743 -0.218765 -0.152126 0.000000 0.000000 0.000000 HURDLE 7.730783 -0.064326 0.000781 0.027254 0.291647 -0.177824 0.277921 -1.355117 1.771292 0.091382 0.000000 -0.761846 -0.142611 -0.807679 0.000000 0.000000 0.810740

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It is important to mention that in this work we used a 10% confidence level, in this sense, the variables that which coefficients were not statistically significant for this confidence level were replaced by zeros. We find a quadratic relationship between the decisions of visit the doctor (DOCTORD) and the age of the agent since this variable and the age-squared are significant variables in this model, this means that for the first stage, age is a significant variable. However, for the second stage this variable does not explain the decision of the number of visits.

Furthermore, Education (measured as the number of years of schooling) is a significant variable for both stages1, however, for the first stage this variable has a positive effect while for the second stage, this variables has a negative effect. It is possible to find in the literature arguments for both effects.

Grossman explained that educated people increases the marginal product of the inputs used and, therefore, reduce the necessary amount of them to produce the same amount of health. In this sense, as Pohlmeier and Ulrich mentioned, once the patient has

visited the doctor and know which is his health problem and the necessary treatment, he can take care of himself in a better way and can improve their health more efficiently than less educated patients, this leads to less number of visits in the future, as the marginal effect of this variable measures for the Hurdle model.

Marital status (MARRIED) is also an explanatory variable for the first stage, this means that it is more probably that married people decide to visit a doctor; this could be explained by the fact that married couples tend to promote the visits to the doctor when the husband or wife fell any kind of illness. However, the marital status is not a

statistically significant variable on the second stage; this means that marital status has no effect over the number of visits to the doctor. On the other hand, referring also to the family characteristics, we found that for both stages, the family size have a statistically negative impact.

1

At a 10% confidence level. 19

ECONOMETRICS – Microeconometric Final Exam Arbulú Italo Raul A. Arbulú Villanueva

In the case of people actively engage with sports activities it is interesting to appreciate that this group are more likely to visit the doctor as a first stage decision. However, this variable (SPORTS) is not a significant variable on the second stage. This could be explained by the fact that people who are actively engaged in sports tend to care more about their health status.

The variables GOODH and BADH capture the incidence of an illness in the previous periods and the perception of the agent over his health status. It is not surprising that individuals who feel ill increase the probability of visiting a doctor while individuals who feel that their health status is good are less probably to visit a doctor in the first-stage (probit model). This relationship also holds on the second-stage (count data model using a negative binomial distribution), this means that the perception of the health status is also an indicator for the doctor at the moment of setting the visit schedule for the patient.

There is no evidence that welfare payments (SOZH) have a positive impact over the probability of taking the decision to visit a doctor for the first time. However individuals who receive welfare payments tend to have more visits to the doctor. As Zweifel

mentioned, there is an incentive to promote more visits because it generates more income to the doctor, in this sense, doctors tend to increase the number of visits of this group.

An important issue revealed by the hurdle model is that income (LOGINC) is not a significant variable. Germany has a highly state-financed health-care system like most European nations, and subsequently the results obtained in the first stage reveal that as the cost of medical care is very low citizens with low income does not see the cost as a problem at the moment to take the decision to visit a doctor. On the other hand, in this kind of systems, the doctors do not know the income level of the patient, furthermore, the system gives revenues to the doctor based on the number of patients but not over the income of them, in this sense, doctors have no incentive to increase the number of visits based on this variable.

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The dummy variables used to measure the differences in labor status showed that the reference group (retired or former workers) tends to visit more times a doctor than unemployed workers (UNEMP), part-time workers (PT) or full time workers (FT). This can be appreciated by the fact that all the dummy coefficients are negatives.

Seasonal dummies (WINTER, SPRING and FALL) are not significant to explain the number of visits to the doctor. However, in the first stage only FALL is statistically significant, this means that the probability to visit the doctor for the first time increases in FALL over the rest of seasons.

Finally, it is important to mention that the expected number of visits to the doctor is 3.65 approximately. This was estimated forecasting the Hurdle model which results are

shown in the following graphs:

10 9 8 7 6 5 4 3 2 1 1000 2000 3000 4000 5000 6000 Root Mean Squared Error Mean Absolute Error 4.057016 2.304492 Forecast: DOCTCO_F Actual: DOCTCO_ Forecast sample: 1 6500 IF DOCTCOD=1 Included observations: 4075

DOCTCO_F

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900 800 700 600 500 400 300 200 100 0 2 3 4 5 6 7 8 9 Series: DOCTCO_F Sample 1 6500 IF DOCTCOD=1 Observations 4075 Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis Jarque-Bera Probability 3.654933 3.084520 9.583826 1.853764 1.631899 1.451277 3.947390 1582.860 0.000000

As we can see, the variables has more concentration over lower values, in this case, mean and median are values between 3 and 4 visits which are values near to the minimum (approximately 2 visits) while the maximum number of visits is almost 10. This is also confirmed by the Jarque-Bera test which is a test statistic for testing whether the series is normally distributed (the null hypothesis of a normal distribution), in this sense, this test showed that the expected number of visits does not have a normal distribution.

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6. MAIN CONLUSIONS The main objective of this work was to understand the determinants of health care utilization in Germany and determine if citizen actively involved in sports activities and with higher level of education tend to demand more health care services. This objective was successfully achieved through the use of specific methods that account for the characteristics of our dependent variable. On the basis of a Hurdle model using a negative binomial distribution, the determinants of the demand for medical services as measured by the number of visits to the doctor in the last 3 months was estimated. Moreover, the Hurdle model approach allows us to separate and quantify the determinants of medical demand regarding contact and frequency decisions. Without repeating all empirical findings, at this point we would like to emphasize only the main results: • For the German case, people actively engage with sports activities are more likely to visit the doctor as a first stage decision. This could be explained by the fact that this group tend to take care more about their health status. However, there is no evidence that relate this to the number of visits, since this is a medical decision which is not involved with the sports activities (second stage). •

Education is a significant variable for both stages, however, for the first stage this variable has a positive effect while for the second stage, this variables has a negative effect. As a whole, this variable has a positive marginal effect for the Hurdle model.

•

The expected number of visits to the doctor is approximately 3.65, but the distribution of this series showed more concentration over lower values (the median is approximately 3 visits) than higher number of visits.

Finally, it is important to mention that behind this formulation, there are some variables not included in the survey that could improve the results for future research and obtain even more accurate estimations such as variables related to the illness or the use of

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private health insurance. Formulations that take into account interdependence between demands for health insurance and health care or demand for health specialist (for example cardiologists) are also improvements that could be done in the future.

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**7. BIBLIOGRAPHY AND SOURCES
**

Balsa, Ana Inés; Ferrés, Daniel; Rossi, Máximo; Triunfo, Patricia 2007 “Inequidades socioeconómicas en el uso de servicios sanitarios del adulto mayor montevideano” Facultad de Ciencias Sociales, Universidad de la República. Documento de Trabajo No. 13/07, octubre de 2007.

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28 ECONOMETRICS – Microeconometric Final Exam Arbulú Italo Raul A. Arbulú Villanueva

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