Accounting for Spatial Interactions in the Demand for Community-Based Health Insurance: A Bayesian Spatial Tobit Analysis

Hermann Donfouet, Université de Rennes I
P. Wilner Jeanty, Rice University
Eric Malin, Université de Rennes I

Community-based health insurance (CBHI) has emerged as an effective alternative to provide households in rural areas of developing countries coverage against diseases.Previous studies had shown that the demand for coverage against diseases is increasingly strong in rural areas. Most of these studies had used the contingent valuation method to assess the demand for CBHI. Nevertheless, these studies fail to address spatial interactions in the demand for CBHI. This may likely bias the estimates and compromise policy-making. This paper investigates the spatial interactions in the demand for CBHI in one rural setting in developing country. The spatial autoregressive Bayesian Tobit model is used.The results suggest that there are spatial interactions in the demand for CBHI and an efficiency gain when the spatial autoregressive Bayesian Tobit model is used. Furthermore, the results also show that households buying behaviours for CBHI are strategic complements. The policy implications of the results are discussed.