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Ageing, Health, and ProductivityThe Economics of Increased Life Expectancy$
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Pietro Garibaldi, Joaquim Oliveira Martins, and Jan van Ours

Print publication date: 2010

Print ISBN-13: 9780199587131

Published to Oxford Scholarship Online: January 2011

DOI: 10.1093/acprof:oso/9780199587131.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 13 April 2021

Preferences towards Health Care: Is Health a Luxury Good?

Preferences towards Health Care: Is Health a Luxury Good?

(p.39) 3 Preferences towards Health Care: Is Health a Luxury Good?
Ageing, Health, and Productivity

Brigitte Dormont

Joaquim Oliveira Martins

Florian Pelgrin

Marc Suhrcke

Oxford University Press

This chapter investigates empirically the relation between GDP growth and health expenditures. Since Newhouse (1977) an extensive empirical literature has sought to assess whether health care is a luxury (income elasticity above one) or a necessity (elasticity below one). This is still an unsettled issue, which is unfortunate since most projections of future expenditures rely on assumptions regarding this elasticity. An income elasticity greater than one implies that consumers' preferences drive health expenditure above income growth and could explain the increase in the share of health care in GDP.

Keywords:   ageing, GDP growth, health expenditure, public policy

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