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A flexible copula regression model with Bernoulli and Tweedie margins for estimating the effect of spending on mental health


Marra, Giampiero; Fasiolo, Matteo; Radice, Rosalba; Winkelmann, Rainer (2022). A flexible copula regression model with Bernoulli and Tweedie margins for estimating the effect of spending on mental health. Working paper series / Department of Economics 413, University of Zurich.

Abstract

Previous evidence shows that better insurance coverage increases medical expenditure. However, formal studies on the effect of spending on health outcomes, and especially mental health, are lacking. To fill this gap, we reanalyze data from the Rand Health Insurance Experiment and estimate a joint non-linear model of spending and mental health. We address the endogeneity of spending in a flexible copula regression model with Bernoulli and Tweedie margins and discuss its implementation in the freely available GJRM R package. Results confirm the importance of accounting for endogeneity: in the joint model, a $1000 spending in mental care is estimated to reduce the probability of low mental health by 1.3 percentage points, but this effect is not statistically significant. Ignoring endogeneity leads to a spurious (upwardly biased) estimate.

Abstract

Previous evidence shows that better insurance coverage increases medical expenditure. However, formal studies on the effect of spending on health outcomes, and especially mental health, are lacking. To fill this gap, we reanalyze data from the Rand Health Insurance Experiment and estimate a joint non-linear model of spending and mental health. We address the endogeneity of spending in a flexible copula regression model with Bernoulli and Tweedie margins and discuss its implementation in the freely available GJRM R package. Results confirm the importance of accounting for endogeneity: in the joint model, a $1000 spending in mental care is estimated to reduce the probability of low mental health by 1.3 percentage points, but this effect is not statistically significant. Ignoring endogeneity leads to a spurious (upwardly biased) estimate.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:I13, C31
Uncontrolled Keywords:Binary response, co-payment, copula, health expenditures, penalized regression spline, Rand experiment, simultaneous estimation, Tweedie distribution
Language:English
Date:May 2022
Deposited On:13 May 2022 09:59
Last Modified:13 May 2022 10:00
Series Name:Working paper series / Department of Economics
Number of Pages:26
ISSN:1664-7041
OA Status:Green
Official URL:http://www.econ.uzh.ch/static/wp/econwp413.pdf
Related URLs:https://www.econ.uzh.ch/en/research/workingpapers.html

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