TY - JOUR
T1 - Do you have to win it to fix it?
T2 - a longitudinal study of lottery winners and their health-care demand
AU - Cheng, Terence C.
AU - Costa-Font, Joan
AU - Powdthavee, Nattavudh
N1 - Publisher Copyright:
© 2017 American Society of Health Economists and Massachusetts Institute of Technology.
PY - 2018
Y1 - 2018
N2 - We exploit lottery wins to investigate the effects of exogenous changes to individuals’ income on the utilization of health-care services, and the choice between private and public health care in the United Kingdom. Our empirical strategy focuses on lottery winners in an individual fixed-effects framework and hence the variation of winnings arises from within-individual differences in small versus large winnings. The results indicate that lottery winners with larger wins are more likely to choose private health services than public health services from the National Health Service. The positive effect of wins on the choice of private care is driven largely by winners with medium to large winnings (win category > £500 [or US$750]; mean = £1,922.5 [US$2,893.5], median = £1,058.2 [US$1,592.7]). There is some evidence that the effect of winnings vary by whether individuals have private health insurance. We also find weak evidence that large winners are more likely to take up privatemedical insurance. Largewinners are alsomore likely to drop private insurance coverage between approximately 9 and 10 months earlier than smaller winners, possibly after their winnings have been exhausted. Our estimates for the lottery income elasticities for public health care (relative to no care) are very small and are not statistically distinguishable fromzero; those of private health care range from0 to 0.26 for most of the health services considered, and 0.82 for cervical smear.
AB - We exploit lottery wins to investigate the effects of exogenous changes to individuals’ income on the utilization of health-care services, and the choice between private and public health care in the United Kingdom. Our empirical strategy focuses on lottery winners in an individual fixed-effects framework and hence the variation of winnings arises from within-individual differences in small versus large winnings. The results indicate that lottery winners with larger wins are more likely to choose private health services than public health services from the National Health Service. The positive effect of wins on the choice of private care is driven largely by winners with medium to large winnings (win category > £500 [or US$750]; mean = £1,922.5 [US$2,893.5], median = £1,058.2 [US$1,592.7]). There is some evidence that the effect of winnings vary by whether individuals have private health insurance. We also find weak evidence that large winners are more likely to take up privatemedical insurance. Largewinners are alsomore likely to drop private insurance coverage between approximately 9 and 10 months earlier than smaller winners, possibly after their winnings have been exhausted. Our estimates for the lottery income elasticities for public health care (relative to no care) are very small and are not statistically distinguishable fromzero; those of private health care range from0 to 0.26 for most of the health services considered, and 0.82 for cervical smear.
KW - Health care
KW - Income elasticity
KW - Lottery wins
KW - Public-private
UR - http://www.scopus.com/inward/record.url?scp=85041038431&partnerID=8YFLogxK
U2 - 10.1162/ajhe_a_00092
DO - 10.1162/ajhe_a_00092
M3 - Article
C2 - 29430486
AN - SCOPUS:85041038431
SN - 2332-3493
VL - 4
SP - 26
EP - 50
JO - American Journal of Health Economics
JF - American Journal of Health Economics
IS - 1
ER -