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Biostatistics Advance Access published online on May 4, 2005
Biostatistics, doi:10.1093/biostatistics/kxi031
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© The Author 2005. Published by Oxford University Press. All rights reserved. For permissions, please e-mail: journals.permissions@oupjournals.org.
Received November 18, 2003
Revised March 30, 2005
Accepted April 27, 2005

Article

SMOOTH QUANTILE RATIO ESTIMATION WITH REGRESSION: ESTIMATING MEDICAL EXPENDITURES FOR SMOKING ATTRIBUTABLE DISEASES

Francesca Dominici 1* and Scott L. Zeger 1

1 Department of Biostatistics at the Johns Hopkins University Bloomberg School of Public Health, Baltimore, MD 21205-3179, USA

* To whom correspondence should be addressed.
Francesca Dominici, E-mail: fdominic{at}jhsph.edu


  Abstract

The methodological development of this paper is motivated by a common problem in econometrics where we are interested in estimating the difference in the average expenditures between two populations, say with and without a disease, as a function of the covariates. For example, let Y1 and Y2 be two non-negative random variables denoting the health expenditures for cases and controls. Smooth Quantile Ratio Estimation (SQUARE) is a novel approach for estimating {Delta} = E[Y1] - E[Y2] by smoothing across percentiles the log-transformed ratio of the two quantile functions. Dominici et al. (2004) have shown that SQUARE defines a large class of estimators of {Delta}, is more efficient than common parametric and non-parametric estimators of {Delta}, and is consistent and asymptotically normal.

However, in applications it is often desirable to estimate {Delta}(x) = E[Y1 | x] - E[Y2 | x], that is the difference in means as a function of x. In this paper we extend SQUARE to a regression model and we introduce a two-part regression SQUARE for estimating {Delta}(x) as a function of x. We use the first part of the model to estimate the probability of incurring any costs, and the second part of the model to estimate the mean difference in health expenditures, given that a non-zero cost is observed. In the second part of the model, we apply the basic definition of SQUARE for positive costs to compare expenditures for the cases and controls having "similar" covariate profiles. We determine strata of cases and control with "similar" covariate profiles by use of propensity score matching.

We then apply two-part regression SQUARE to the 1987 National Medicare Expenditure Survey to estimate the difference {Delta}(x) between persons suffering from smoking attributable diseases and persons without these diseases as a function of the propensity of getting the disease. Using a simulation study, we compare frequentist properties of two-part regression SQUARE with maximum likelihood estimators for the log-transformed expenditures.

Keywords: Comparing means; skewed distributions; log-normal; regression splines; quantile regression; Q-Q plots; smoking; health expenditures; propensity scores.
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