Income Elasticity Of Demand Healthcare

High income elasticity suggests that when a consumer s income rises consumers will purchase much more of that good.

Income elasticity of demand healthcare. The income elasticities are higher at the low income level and lower at the higher income level. The income elasticity of demand for health share will be taken as the coefficient on the natural log or percent growth of gdp the independent variable when regressed on the natural log of health expenditure as a percent of gdp. For instance one healthcare service can be a necessity for the wealthy people and can be a luxury for the middle class. This estimate is represented as.

It can happen if health care expenses were decreased on 10 because of 20 increase of consumers income. The income elasticity of demand measures the rate of response of quantity demanded due to an increase or decrease in consumer income 18 the higher income elasticity the more sensitive demand for a good is to changes in income. The elasticities vary with incomes. Due to the high income elasticity of demand for health care services the demand is increasing improperly with the rise of the incomes making the costs of these services and products unendurable.

Across the income groups and levels of health expenditure in india jay dev dubey1 abstract this study computes income elasticity of out of pocket healthcare expenditures of indian households both across the income groups using the spline regression model and across the level of health expenditure based on the quintile. Income elasticity of demand for health care and it s change over time. Negative income elasticity means that the good is inferior and an increase decrease in income would decrease increase the demand for that good.