THE APPROPRIATE EMPIRICAL MEASUREMENT OF HEALTH STATUS
AbstractT h e p re s e n t p a p e r p re s e n t s a methodological essay demonstrating how a person's health status can be ascertained empirically from the types of survey data available to economists. The main econometric problem is that health status is a latent variable, neither directly observable nor directly measurable. Analysts attempt to deal with this problem by using health proxies such as various mortality rates or morbidity measures including days-in-bed, work-loss-days, etc. But there is no indication of why the chosen proxies are adequate or are superior to their alternatives. The method introduced in this essay extends the concept of morbidity by conceptualizing health status in terms of illness. Illness itself can be measured by a real number that represents the illness severity. Empirically, actual diagnostic conditions, symptoms, as well as the limiting and debilitating effects of illness are incorporated in a multipleindicatorsmultiple-causes (MIMIC) structural equation model of the latent variable, severity-of-illness. For example, whether or not a person can climb a flight of stairs without help can be combined with knowledge of the person's age, etc. to learn something useful about the person's health status; so also are medical histories useful. A hindering problem in Nigeria is the nonavailability of appropriate data. For that reason, the present methodological essay uses data from the United States National Medical Care Utilization and Expenditures Survey for illustration.
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