Volume 30, Number 2 (Spring) 1995
Pohlmeier, Winfried, and Volker Ulrich. 1995. "An Econometric Model of the Two-Part Decision Process in the Demand for Health." Journal of Human Resources 30(2):339-361.
The decision to contact a physician and the decision about how often to contact a physician are determined by different decisionmakers. We introduce a negative binomial distributed hurdle model that specifies the two stages of the decisionmaking process as different stochastic processes, while at the same time taking care of the discrete nature of the data. Empirical results are based on a cross-section of the Western German Socioeconomic Panel. Specification tests reveal that the two stages of the process need to be treated as two distinct processes. This, in turn, implies that ignoring this distinction leads to serious misinterpretation.
Winfried Pohlmeier is a professor of economics at the University of Konstanz. Volker Ulrich is an assistant professor of economics at the University of Mannheim, Germany. This paper was written when Pohlmeier was a John F. Kennedy Fellow at the Center for European Studies, Harvard University. The authors would like to thank Manfred Erbsland, Heinz König, François Laisney. Walter Ried, Eberhard Wille, and Klaus Winckler for helpful comments. The German Marshall Fund and the Deutsche Forshungsgemeinschaft are gratefully acknowledged for financial support. The usual disclaimer applies. An earlier version of this paper was presented at the 48th Annual Congress of the International Institute for Public Finance, Seoul, August 10, 1992. The data used in this article can be obtained beginning in August 1995 through August 1998 from Winfried Pohlmeier, Department of Economics, University of Konstanz, P.O. Box 5560 D124, 78434 Konstanz, Germany.
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