The European Journal of Health Economics

, Volume 19, Issue 8, pp 1067–1086 | Cite as

Testing the Grossman model of medical spending determinants with macroeconomic panel data

  • Jochen HartwigEmail author
  • Jan-Egbert Sturm
Original Paper


Michael Grossman’s human capital model of the demand for health has been argued to be one of the major achievements in theoretical health economics. Attempts to test this model empirically have been sparse, however, and with mixed results. These attempts so far relied on using—mostly cross-sectional—micro data from household surveys. For the first time in the literature, we bring in macroeconomic panel data for 29 OECD countries over the period 1970–2010 to test the model. To check the robustness of the results for the determinants of medical spending identified by the model, we include additional covariates in an extreme bounds analysis (EBA) framework. The preferred model specifications (including the robust covariates) do not lend much empirical support to the Grossman model. This is in line with the mixed results of earlier studies.


Medical spending Grossman model Extreme bounds analysis OECD panel 

JEL Classification

C12 C23 I10 I12 



This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors. We thank two anonymous reviewers for valuable comments. All remaining errors are ours.

Compliance with ethical standards

Conflict of interest

There are no conflicts of interest or ethical issues.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of Economics and Business AdministrationChemnitz University of TechnologyChemnitzGermany
  2. 2.KOF Swiss Economic InstituteETH ZurichZurichSwitzerland
  3. 3.CESifoMunichGermany

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