How Do You Feel? The Effect of the New Cooperative Medical Scheme in China

During the 2003-2006 period, subjective health status in Chinese rural areas improved. We used a unique household longitudinal survey to analyze how the introduction of a public insurance system has contributed to the change. This program is based on a doubly voluntary process: counties decide to launch, then households decide to subscribe. We disentangle two channels of influence of the insurance: the insurance effect of the coverage and a general equilibrium effect on all residents in the insurance-adopting counties. The empirical findings include, first, a positive extensive margin: individuals feel better about their health status when covered by the NCMS. However, there is no intensive margin: an individual's self-assessed health status does not improve with the number of years enrolled in the program. Second, we find a positive general equilibrium effect of introducing the NCMS program on non-participants in NCMS counties. This effect accumulates over time

Income Inequality, Status Seeking, and Consumption

Using the Chinese urban household survey data between 1997 and 2006, we find that income inequality has a negative (positive) impact on households’ consumption (savings), even after we control for family income. We argue that people save to improve their social status when social status is associated with pecuniary and non-pecuniary benefits. Rising income inequality can strengthen the incentives of status-seeking savings by increasing the benefit of improving status and enlarging the wealth level that is required for status upgrading. We also find that the negative effect of income inequality on consumption is stronger for poorer and younger people, and income inequality stimulates more education investment, which are consistent with the status seeking hypothesis.income inequality; social status; consumption and savings; status seeking; education investment

Income Inequality, Status Seeking, and Consumption

Using the Chinese urban household survey data between 1997 and 2006, we find that income inequality has a negative (positive) impact on households’ consumption (savings), even after we control for family income. We argue that people save to improve their social status when social status is associated with pecuniary and non-pecuniary benefits. Rising income inequality can strengthen the incentives of status-seeking savings by increasing the benefit of improving status and enlarging the wealth level that is required for status upgrading. We also find that the negative effect of income inequality on consumption is stronger for poorer and younger people, and income inequality stimulates more education investment, which are consistent with the status seeking hypothesis

How Do You Feel? The Effect of the New Cooperative Medical Scheme in China

International audienceIn 2003, a public insurance system was introduced in Chinese rural areas. In the meantime, subjective health status improved. We used a unique household longitudinal survey to analyse how the introduction of an insurance system, known as the New Cooperative Medical Scheme (NCMS), has contributed to the change. This health insurance programme was launched sequentially over counties starting in 2003, and households voluntarily chose whether to participate the programme after its launch by the county. These characteristics make it feasible to disentangle two channels of the influence of the NCMS on self-reported health status. One is the insurance effect of the coverage, which can be estimated by comparing the insured households with non-participants in the villages located in counties that have launched the programme (NCMS counties); the other is the general equilibrium effect that affects all residents in the NCMS counties, and can be estimated by comparing non-participants with the non-exposed households. The longitudinal data also allow us to examine how the effect changes with the duration of households’ subscription to the programme. The empirical findings include: first, a positive extensive margin: an individual feels better about his or her health status when covered by the NCMS. However, there is no intensive margin: there is no additional gain in the self-assessment of health status with the individual’s number of years enrolled in the programme. Second, we find a positive general equilibrium effect of introducing the NCMS programme on non-participants in the NCMS county. This effect accumulates over time

Linear Regression with an Estimated Regressor: Applications to Aggregate Indicators of Economic Development

This study examines the consequences of using an estimated aggregate measure as an explanatory variable in linear regression. We show that neglecting the seemingly small sampling error in the estimated regressor could severely contaminate the estimates. We propose a simple statistical framework to account for the error. In particular, we apply our analysis to two aggregate indicators of economic development, the Gini coefficient and sex ratio. Our findings suggest that the impact of the estimated regressor could be substantially underestimated, when the sampling error is not accounted for

Income inequality, consumption, and social-status seeking

Using the Chinese Urban Household Survey data between 1997 and 2006, we find that income inequality has a negative (positive) effect on household consumption net of education expenditures (savings) even after we control for household income. We argue that people save to improve their social status when social status is associated with pecuniary and non-pecuniary benefits. Rising income inequality can strengthen the incentives of status-seeking savings by increasing the benefit of improving status, and by enlarging the wealth level required for status upgrading. We also find that the negative effect of income inequality on consumption is stronger for poorer and younger people and that income inequality stimulates more education investment, which are consistent with the status-seeking hypothesis.Income inequality Social status Consumption and savings Status seeking Education investment