Heterogeneity in the Persistence of Health: Evidence from a Monthly Micro Panel

• Main Authors: HOSKINS, Stephen, JoOHNSTON, David W., KUNZ, Johannes S., SHIELDS, Michael A., STAUB, Kevin E.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: self-reported health; healthcare utilisation; dynamic panel data; state dependence; heterogeneity; Health Economics
• Online Access: https://ink.library.smu.edu.sg/rosa_publications/4; https://ink.library.smu.edu.sg/context/rosa_publications/article/1003/viewcontent/Heterogeneity_in_the_Intertemporal_Persistence_of_Health_wp.pdf
• Institution: Singapore Management University

Despite being widely used in health economics, dynamic models of health and healthcare typ ically assume that the persistence in these outcomes is the same for every individual. This paper explores individual-level heterogeneity in the persistence of health outcomes. Using simple re gression methods that do not place any restriction on the distribution of the heterogeneity in persistence, the paper documents substantial heterogeneity in health, medical expenditures, and healthcare use. We show that neglecting this heterogeneity leads to estimates that overstate the average persistence and can bias the coefficients of covariates. We find that between 75% and 87% of individuals display persistence and that this persistence is related to the individuals’ personality and socio-economic characteristics.