Question

See page 11, second paragraph. Why do the individuals with insurance in Table 1.1 have higher levels of health than those individuals without health insurance?

PAGE 11

We wrap up this discussion by pointing out the subtle role played by information like that reported in panel B of Table 1.1. This panel shows that the groups being compared differ in ways that we can observe. As we’ll see in the next chap- ter, if the only source of selection bias is a set of differences in characteristics that we can observe and measure, selection bias is (relatively) easy to fix. Suppose, for example, that the only source of selection bias in the insurance comparison is education. This bias is eliminated by focusing on samples of people with the same schooling, say, college graduates. Edu- cation is the same for insured and uninsured people in such a sample, because it’s the same for everyone in the sample.

table 1.1

Husband			Wives
	Some HI (1)	No HI (2)	Difference (3)	Some HI (4)	No HI (5)	Difference (6)
			A. Health
Health index	4.01 [0.93]	3.70 [1.01]	0.31 [0.03]	4.02 [0.92]	3.62 [1.01]	0.39 [0.04]
			B. Characteristic
Nonwhite	0.16	0.17	-0.01 (0.01)	0.15	0.17	-0.02 (0.01)
Age	43.98	41.26	2.71 (0.29)	42.24	39.62	2.62 (0.30)
Education	14.31	11.56	2.74 (0.10)	14.44	11.80	2.64 (0.11)
Family size	3.50	3.98	-0.47 (0.05)	3.49	3.93	-0.43 (0.05)
Employed	0.92	0.85	0.07 (0.01)	0.77	0.56	0.21 (0.02)
Family income	106,467	45,656	60,810 (1,355)	106,212	46,385	59,828 (1,406)
Sample size	8,114	1,281		8,264	1,131

Answer 1

The individuals with insurance have higher levels of wealth than individuals without health insurance because individuals with insurance need not worry about the cost of the health operations and medicines as all of it or a part of it is covered by the insurance policy. Thus, they can invest more money in taking care of their health without much worry about the cost to be incurred. On the other hand, individuals without any health insurance can spend only a limited amount of money on their health care and sometimes have to sacrifice with their health because of the high to be incurred by then only. Thus, individuals with health insurance have higher levels of health than those individuals without health insurance.