Reply to: Econometric issues in testing the age neutrality of health care expenditure

Salas and Raftery allege that in our paper, (1) remaining life expectancy i s an endogenous explanatory variable of health care expenditure and (2) the parameter designed to correct for sample selection bias in fact represents a hidden relationship between health care expenditure and age. We argue th at claim (1) is not supported by the available empirical evidence, while cl aim (2) seems to derive from a too cursory reading of our paper. Copyright (C) 2001 John Wiley & Sons, Ltd.