The relationship between pharmaceutical expenditure and life expectancy: evidence from 21 OECD countries

Abstract

The purpose of this article is to examine the effect of pharmaceutical expenditures on life expectancy for 21 OECD countries. An unbalanced panel data model is used to investigate the role of socio-economic, lifestyle and demographic factors as well as public and private pharmaceutical expenditures in determining life expectancy for six age–gender strata over the period 1985 to 2002. The empirical results show that pharmaceutical expenditure has a positive, but different effect on life expectancy for females and males with various ages.

Acknowledgements

The author would like to thank Alan King for very helpful comments that have substantially improved this article.

Notes

¹ Austria, the Czech Republic, Hungary, Korea, Mexico, Poland, the Slovak Republic, Sweden, Switzerland and Turkey are excluded from the set of countries in the sample.

² Before estimation, the unit root test was applied to all variables. This revealed that both income and expenditure variables were nonstationary, so the first differences were used during the estimation procedure.