Data for Albania are from 2005, for Bosnia and Herzegovina from 2004, for Montenegro from 2004, for Serbia from 2003, and for Kosovo from 2000. Sample size, for the sample on which there were observations for all variables included in the probit analyses, is 15,434 individual in Albania, 2,325 in Bosnia and Herzegovina, 8,205 in Montenegro, 7,871 in Serbia, and 16,013 in Kosovo.

Throughout the analysis, sample weights are used to produce population estimates at the countrylevel.

Summary statistics for key variables are presented in the Appendix, Table A1.

# _3.2 Measurement_

Health status is a complicated, multi-faceted phenomenon that is measured with substantial error, especially when health status is derived from subjective responses by individuals in a sample survey. The degree of measurement error may also vary systematically by factors such as the age and gender of the respondent and the nature of the illness. In these surveys, health status measures are self-reported, and a distinction is made between the severity of illness, namely chronic and sudden/acute<sup>7</sup> .

Information is available in all surveys on the utilization and costs of different types of health services, as well as medicines, although the types of services listed sometimes differs across surveys. Also, information on health insurance is not available for Serbia and Kosovo (which has no social health insurance scheme).

In most places (i.e. in Albania, Serbia and Kosovo), the questionnaires distinguish between formal health payments, transportation costs and informal health expenses. Yet, although specific questions were included in the LSMS on both formal charges for consultations and the value of unofficial ‘gifts’ (in cash or in kind) made to the medical staff, it is likely that at least some respondents may not know whether the formal charges they paid were ‘official’ or not. Underestimation of out-of-pocket payments for drugs and medical supplies is less likely because all LSMS surveys distinguish between payments for drugs covered under a prescription and other drugs.

A last source of heterogeneity across the health modules in the household surveys is the period under analysis. Most questions refer to health-related events in the past 4 weeks, but some refer to the past 12 or 14 months. An effort has been made to homogenize the time span, but imputed figures should be treated with caution because health care utilization due to an acute illness shock may vary over time.

There are many approaches to measuring living standards, including direct approaches (e.g. income, expenditure, or consumption) and proxy measures (e.g. the construction of asset indices). We use total per capita expenditure as the main living standards measure, a decision that is driven by data availability. In order to obtain this measure, households are ranked by real total expenditure (consisting of all types of consumption by the households including food, non-food, utilities and education expenses, as well as the use value of durable goods owned by the household), adjusted for the household size. Quintile measures of living standards, in which households are classified into five equal-sized per capita consumption quintiles, are also used. The concepts “poor” and “non-poor”, when used in this paper, will refer to those below and

> 7 The actual survey questions on health status, health care utilization and health insurance are given in Table A2.

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