The price elasticity of demand for pharmaceuticals amongst high income older Australians: A natural experiment

Peter Matthew Siminski

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Most high-income older Australians became eligible for a pharmaceutical concession through a 1999 policy change. I exploit this natural experiment to estimate their price elasticity of demand for pharmaceuticals. The preferred model is a nonlinear Instrumental Variable (IV) regression, estimated on nationally representative repeated cross-sectional survey data using the Generalized Method of Moments (GMM). No significant evidence is found for endogenous take-up, and so cross-sectional estimates are also considered. Taking all of the results into account, the headline estimate is -0.1, implying that quantity demanded is not highly responsive to price.
Original languageEnglish
Pages (from-to)4835 - 4846
Number of pages12
JournalApplied Economics
Issue number30
Publication statusPublished - 2011

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