Economics of self‐medication: theory and evidence

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Abstract
A pervasive phenomenon in developing countries is that self‐prescribed medications are purchased from drug vendors without professional supervision. In this article we develop a model of self‐medicating behavior of a utility‐maximizing consumer who balances the benefits and risks of self‐medication. The empirical investigation focuses on the role of income and health insurance on the use of self‐medication. Our data are from the World Bank's Living Standards Measurement Survey of Vietnam, 1997–1998. The results show that self‐medication is an inferior good at high income levels and a normal good at low income levels, and it shows a strong and robust negative insurance effect. Copyright © 2003 John Wiley & Sons, Ltd.