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Assessing household health expenditure with Box-Cox censoring models
1Department of Econometrics & Laboratory of Applied Economics, University of Geneva, Switzerland. jean-paul.chaze@metri.unige.ch
Abstract:
In order to assess the combined presence of zero expenditures and a heavily skewed distribution of positive expenditures, the Box-Cox transformation with location parameter is used to define a set of models generalising the standard Tobit, Heckman selection and double-hurdle models. Extended flexibility with respect to previous specifications is introduced, notably regarding negative transformation parameters, which may prove necessary for medical expenditures, and corner-solution outcomes. An illustration is provided by the analysis of household health expenditure in Switzerland.
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