Demand for Traditional Medicine in Taiwan: A Mixed Gaussian-Poisson Model Approach

Hurdle count models are used to examine the participation and consumption decisions in Chinese medicine use. Motivated by a household production model, a second censoring mechanism is introduced into existing single-hurdle models, and the resulting specification accommodates conscientious abstainers, as well as economic non-consumers, and admits excessive zeros in the sample. In contrast to previous studies that found few predictors, empirical results based on a Taiwanese national sample suggest that Western medicine is a gross substitute to Chinese medicine, and both time price and money price play more important roles than income. Insurance, lifestyle and demographics also determine the use of Chinese medicine. Copyright © 2001 John Wiley & Sons, Ltd.