Quantifying Health Shocks over the Life Cycle

Taiyo Fukai, Hidehiko Ichimura and Kyogo Kanazawa

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We first show (1) the importance of investigating health expenditure processes using the order two Markov chain model, rather than the standard order one model, which is widely used in the literature. The Markov chain of order two is a minimal framework that is capable of distinguishing those who experience a certain health expenditure level for the first time from those who have been experiencing that or other levels for some time. In addition, using the model, we show (2) that the probability of encountering a health shock first decreases until around age 10, and then increases with age, particularly, after age 40, (3) that health shock distributions among different age groups do not differ until their percentiles reach the median range, but that above the median, the health shock distributions of older age groups gradually start to first-order dominate those of younger groups, and (4) that the persistence of health shocks also shows a U-shape in relation to age.

Pages: 44 pages
Date: 2018-03
New Economics Papers: this item is included in nep-hea
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/18e014.pdf (application/pdf)

Related works:
Working Paper: Quantifying Health Shocks Over the Life Cycle (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:18014

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().