• Article

Use of econometric models to estimate expenditure shares

OBJECTIVE: To investigate the use of regression models to calculate disease-specific shares of medical expenditures. DATA SOURCES/STUDY SETTING: Medical Expenditure Panel Survey (MEPS), 2000-2003. STUDY DESIGN: Theoretical investigation and secondary data analysis. DATA COLLECTION/EXTRACTION METHODS: Condition files used to define the presence of 10 medical conditions. PRINCIPAL FINDINGS: Incremental effects of conditions on expenditures, expressed as a fraction of total expenditures, cannot generally be interpreted as shares. When the presence of one condition increases treatment costs for another condition, summing condition-specific shares leads to double-counting of expenditures. CONCLUSIONS: Condition-specific shares generated from multiplicative models should not be summed. We provide an algorithm that allows estimates based on these models to be interpreted as shares and summed across conditions.


Trogdon, J., Finkelstein, E., & Hoerger, T. (2008). Use of econometric models to estimate expenditure shares. Health Services Research, 43(4), 1442-1452. DOI: 10.1111/j.1475-6773.2007.00827.x