A Comparison of Alternative Models for the Demand for Medical Care
- 1 April 1983
- journal article
- research article
- Published by Taylor & Francis in Journal of Business & Economic Statistics
- Vol. 1 (2) , 115-126
- https://doi.org/10.1080/07350015.1983.10509330
Abstract
We have tested alternative models of the demand for medical care using experimental data. The estimated response of demand to insurance plan is sensitive to the model used. We therefore use a split-sample analysis and find that a model that more closely approximates distributional assumptions and uses a nonparametric retransformation factor performs better in terms of mean squared forecast error. Simpler models are inferior either because they are not robust to outliers (e.g., ANOVA, ANOCOVA), or because they are inconsistent when strong distributional assumptions are violated (e.g., a two-parameter Box-Cox transformation).Keywords
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