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Do red herrings swim in circles? Controlling for the endogeneity of time to death


Felder, Stefan; Werblow, Andreas; Zweifel, Peter (2010). Do red herrings swim in circles? Controlling for the endogeneity of time to death. Journal of Health Economics, 29(2):205-212.

Abstract

Studies on the effect of ageing on health care expenditure (HCE) have revealed the importance of controlling for time-to-death (TTD). These studies, however, are subject to possible endogeneity if HCE influences the remaining life expectancy. This paper introduces a 10-year observation period on monthly HCE, socioeconomic characteristics and survivor status to first predict TTD and then use the predicted values as an instrument in the regression for HCE. While exogeneity of TTD has to be rejected, core results concerning the role of TTD rather than age as a determinant of HCE (the ‘red herring’ hypothesis) are confirmed.

Abstract

Studies on the effect of ageing on health care expenditure (HCE) have revealed the importance of controlling for time-to-death (TTD). These studies, however, are subject to possible endogeneity if HCE influences the remaining life expectancy. This paper introduces a 10-year observation period on monthly HCE, socioeconomic characteristics and survivor status to first predict TTD and then use the predicted values as an instrument in the regression for HCE. While exogeneity of TTD has to be rejected, core results concerning the role of TTD rather than age as a determinant of HCE (the ‘red herring’ hypothesis) are confirmed.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:2010
Deposited On:01 Oct 2010 11:32
Last Modified:05 Apr 2016 14:12
Publisher:Elsevier
ISSN:0167-6296
Publisher DOI:https://doi.org/10.1016/j.jhealeco.2009.11.014

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