Estimating conversion rates: A new empirical strategy with an application to health care in Italy.

Abstract

This study proposes a new empirical strategy for assessing how "efficient" different individuals and groups are in converting their available resources into achievements. Following the capabilities approach, pioneered by Amartya Sen, we employ the concept of "conversion rates" to capture the efficiency of the link from resources to achievements. The methodology is both simpler and more conceptually precise than previous options, this offering the potential to support significant expanded work in this area. The proposed methodology is then tested in relation to health care in Italy. The findings suggest that investments in education may carry particular health benefits for women, which public resources are particularly important for the elderly, and that single individuals pose special challenges because they benefit less from all types of resources than married couples. The results thus highlight significant heterogeneities in the abilities of different groups to convert public, private, and nonfinancial resources into health, and we conclude by noting the possible consequences for health care and public policies.