The Determinants of National Outlay on Health

Abstract

This paper investigates international differences in per capita levels of health outlay and in their division between private and public components. The findings support the hypothesis that households, having decided on their desired level of outlays in view of their health conditions and their income, then adjust to allow for the provision of health services by the public sector. Similarly, it holds that the public sector behaves in a parallel manner, adjusting its level of outlays on health services to allow for qualities acquired privately by households. However, from the standpoint of each of the two sectors, the services provided by the other one are imperfect substitutes for those provided by itself.

I am grateful to Mrs Z. Galyam, a graduate student in the Department of Economics, for assistance with the calculations; and to the research committee of the Eliezer Kaplan School of Economics and Social Sciences for financial support.