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- Finance
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11:17 AM

capita

a. Before conducting any empirical analysis, briefly discuss your

expectations about the relationship between the two variables.

We expect that "Life expectancy at birth" and "Public health

expenditure per capita" have correlated relationship which can be

modelled regressively where the first is dependent variable and the

latter is independent one.

b. what do summary descriptive statistics and histograms of public

expenditure on health and life expectancy indicate about their

distributions.

Statistical results:

The variable of "Life expectancy at birth" might follow the rule of

normal distribution where the skewness and kurtosis are

approximately 0 and 3 respectively.

to normally distributed because the values of skewness and

kurtosis are significantly larger than the value of 0 and 3,

respectively.

variables are normally distributed.

With P-value < 0.05, all results has statistical significance. As the

above table can be seen, value of W of "Life expectancy at birth" is

approximately equal to one whereas value of W of "Public health

expenditure per capita" is just 0.59 .

expectancy at birth" has normally distributed while the other "Public

health expenditure per capita" has non-normally distributed.

about the plausibility of the model by creating a scatterplot of life

expectancy and public expenditure on health. How would you

describe the relationship between the two variables? Assess the

relationship by computing a correlation ratio and interpret your

results.

expectancy at birth, denoted by dependent variable Y, and Public

health expenditure per capita which is denoted by independent

variable X. Some inferences are drawn:

The graph shows that a non-linear association between X and Y.

We can use the model created based on the set of data of "Life

expectancy at birth" and "Public health expenditure per capita" for

estimation purpose due to the fitted line.

X and Y.

positively correlated relationship among 2 variables.

variable X is non-normally distributed.

expectancy at birth", and X, "Public health expenditure per capita".

Although the fitted line is fit to the plots in the graph except a few of

outliners, it seems that the coefficient of correlation is not really high,

which is 0.5426 . There are two reasons to explain this:

Relationship among those variables is non-linear whereas the

correlation coefficient reflects linear one.

correlation coefficient is 0.8440 .

a scatter plot of life expectancy and ln(Health expenditure per

capita) and compute the correlation ratio between them. Do these

results influence the potential regression specification to be

chosen?

Graph:

non-linear to almost linear.

0.5426 which is from the previous results.

strongly impact to value of coefficient of correlation and might

make researchers reach some wrong decisions.

by undertaking the following bivariate regression analyses and

then summarize your results.

level of 5%. Thus, we obtain the equation:

estimated regression equation explains 29,44% variations of

values of Y. And this is also significant at 5% by doing F-test which

results in the fact that p-value < 0.05.

level of 5%. Thus, we obtain the equation:

with level significance of 5%.

positively correlated effect of Health expenditures to variations of

Life expectancy.

have analyzed the influence of health expenditure on life

expectancy. Briefly summarize their main findings and review

whether your results are different from them, and if so, why this

might be the case.

relationship between life expectancy at birth and health

expenditures estimated by a cross-country and time-series

analysis" was researched by Elisabeta Jaba, Christiana Brigitte

Balan and Ioan-Bogdan Robu from "Alexandru Ioan Cuza"

University of Iasi, 22 Carol I Avenue, Iasi 700505, Romania and

108 to page 114. Some keys is noted:

expenditures per capita (USD) and Life expectancy at birth (years),

were collected for 175 countries, grouped according to geographic

position and income level, over 16 years from 1995 to 2010.

They applied a panel data analysis to estimate Life expectancy by

a function of Health expenditures.

They used regression model without function of nature logarithm

of explanation variable Health care expenditure.

There is a significant relationship between Health expenditures

and Life expectancy.

Country effects are significant and show the existence of

important differences among the countries.

determinants of health outcomes in Canada" of Pierre

Cremieux et al. published by Health Economics 03/2005 shows

that:

spending in Canadian provinces and overall health outcomes.

The analysis relies on more homogenous data and includes a

more complete set of controls for confounding factors than

previous studies.

Results show a strong statistical relationship between drug

spending and health outcomes, especially for infant mortality and

life expectancy at 65.

The analysis further indicates that substantially better health

outcomes are observed in provinces where higher drug spending

occurs.

Simulations show that if all provinces increased per capita dug

spending to the levels observed in the two provinces with the

highest spending level, an average of 584 fewer infant deaths per

year and over 6 months of increased life expectancy at birth would

result.

Overall, our results are the same as both studies above except the

fact that we highly recommend to use function of logarithm in the

model in order to reflect more accurately the relationship between

Life expectancy and Health expenditures.

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