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Do you have to win it to fix it? A longitudinal study of lottery winners and their health care demand

Cheng, Terence C., Costa-i-Font, Joan and Powdthavee, Nattavudh (2017) Do you have to win it to fix it? A longitudinal study of lottery winners and their health care demand. American Journal of Health Economics . ISSN 2332-3493 (In Press)

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Abstract

We exploit lottery wins to investigate the effects of exogenous changes to individuals' income on the utilization of health care services, and the choice between private and public health care in the United Kingdom. Our empirical strategy focuses on lottery winners in an individual fixed effects framework and hence the variation of winnings arises from within-individual differences in small versus large winnings. The results indicate that lottery winners with larger wins are more likely to choose private health services than public health services from the National Health Service. The positive effect of wins on the choice of private care is driven largely by winners with medium to large winnings (win category > $500 (or US$750); mean = $1922:5 (US$2,893.5), median = $1058:2 (US$1592.7)). There is some evidence that the effect of winnings vary by whether individuals have private health insurance. We also find weak evidence that large winners are more likely to take up private medical insurance. Large winners are also more likely to drop private insurance coverage between approximately 9 and 10 months earlier than smaller winners, possibly after their winnings have been exhausted. Our estimates for the lottery income elasticities for public health care (relative to no care) are very small and are not statistically distinguishable from zero; those of private health care range from 0 { 0.26 for most of the health services considered, and 0.82 for cervical smear.

Item Type: Article
Official URL: http://www.mitpressjournals.org/loi/ajhe
Additional Information: © 2017 The MIT Press
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
R Medicine > RZ Other systems of medicine
Journal of Economic Literature Classification System: D - Microeconomics > D1 - Household Behavior and Family Economics
H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods
I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
Sets: Research centres and groups > LSE Health and Social Care
Date Deposited: 14 Oct 2016 11:55
URL: http://eprints.lse.ac.uk/68024/

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