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Y = X[beta] + [y.sub.1][I.sub.d] + [y.sub.2][I.sub.s] + [mu]where X represents the vector of predisposing, needs, and other enabling factors. Incorporating the selection using the control function model, we haveY = X[beta] + [y.sub.1][I.sub.d] + [y.sub.2][I.sub.s] + [[alpha].sub.0](1 - [I.sub.d] - [I.sub.s])[[lambda].sub.0] + [[alpha].sub.d][I.sub.d][[lambda].sub.d] + [[alpha].sub.s][I.sub.s][[lambda].sub.s] + vThe [lambda]''s are the transformations of the probabilities predicted from the first stage (Heckman 1978; 1979; 1990; Lee 1982; 1983). They are the correction factors similar to the correction factor (inverse Mill''s ratio) in a Heckman correction model where the response variable in the first stage is binary rather than multicategorical (Heckman 1979; 1990). Vella and Verbeek (1999) showed that testing for the presence of endogeneity is equivalent to testing whether [alpha]''s are zero. With the incorporation of the endogeneity control, the effects of having a regular doctor ([I.sub.d]) and having a regular site ([I.sub.s]), conditional on the choice of a usual source of care, are [y.sub.1]+([[alpha].sub.d][[lambda].sub.d]- [[alpha].sub.0],[[lambda].sub.0]) and [y.sub.2]+([[alpha].sub.s][[lambda].sub.s] - [[alpha].sub.0][[lambda].sub.0]), respectively.* A single-equation estimation that regresses utilization over having a usual source of care would provide biased results of the effect of having a usual source of care because of the omitted correction terms.

There is a complex relationship between the physiological and psychological components of health and illness and between the objective and subjective components of these states [1]. Since elderly people are prone to several health problems which have physical, psychological and social components, perceived health is an important factor in old age.

EMPIRICAL ESTIMATIONEmpirical ModelFollowing Figure 1, two equations were used for the estimation. The dependent variables were an individual''s choice of a usual source of care (a regular doctor, a regular site, or no usual source care), denoted by USC, and preventive service use, Y.Prob(USC) =f(predisposing, enabling, needs, error term I) (1)Y=g(predisposing, enabling, needs, USC, error term II) (2)An endogenous treatment effect model, an extension of a selection model, would be appropriate for analyzing the relationship between having a usual source of care and service use, as described above. Numerous analogies of the relationship between a usual source of care and service use can be found in the economics literature. Individuals purchase insurance because they foresee future use of medical care (Dowd et al. 1988). Workers join a union because they expect higher wages (Svejnar 1980). Consumers who purchase cars are those who travel frequently (Truong and Hensher 1985). Individuals who buy energy efficient appliances are those who use the appliances frequently (Revelt and Train 1997). In this study, a control function estimation was used to operationalize the endogenous treatment effect model.

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