Assessing household health expenditure with Box-Cox censoring models

In order to assess the combined presence of zero expenditures and a heavily skewed distribution of positive expenditures, the Box-Cox transformation with location parameter is used to define a set of models generalising the standard Tobit, Heckman selection and double-hurdle models. Extended flexibility with respect to previous specifications is introduced, notably regarding negative transformation parameters, which may prove necessary for medical expenditures, and corner-solution outcomes. An illustration is provided by the analysis of household health expenditure in Switzerland. Copyright (c) 2005 John Wiley & Sons, Ltd.