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The income elasticity of health care spending in developing and developed countries

  • Marwa FaragEmail author
  • A. K. NandaKumar
  • Stanley Wallack
  • Dominic Hodgkin
  • Gary Gaumer
  • Can Erbil
Article

Abstract

To date, international analyses on the strength of the relationship between country-level per capita income and per capita health expenditures have predominantly used developed countries’ data. This study expands this work using a panel data set for 173 countries for the 1995–2006 period. We found that health care has an income elasticity that qualifies it as a necessity good, which is consistent with results of the most recent studies. Furthermore, we found that health care spending is least responsive to changes in income in low-income countries and most responsive to in middle-income countries with high-income countries falling in the middle. Finally, we found that ‘Voice and Accountability’ as an indicator of good governance seems to play a role in mobilizing more funds for health.

Keywords

Income elasticity Governance Developing countries 

JEL Classification

I15 I18 F01 H51 

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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  • Marwa Farag
    • 1
    Email author
  • A. K. NandaKumar
    • 2
  • Stanley Wallack
    • 2
  • Dominic Hodgkin
    • 2
  • Gary Gaumer
    • 3
  • Can Erbil
    • 4
  1. 1.School of Public HealthUniversity of SaskatchewanSaskatoonCanada
  2. 2.The Heller School for Social Policy and ManagementBrandeis UniversityWalthamUSA
  3. 3.School of Nursing and Health SciencesSimmons UniversityBostonUSA
  4. 4.International Business School (IBS)Brandeis UniversityWalthamUSA

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