Consumer Wealth As a Predictor of Plastic Surgery Volume

Purpose:  To estimate the relation between consumer wealth and the demand for the most common elective and reconstructive plastic surgical procedures.

Methods:  A retrospective analysis was done on the five most common plastic surgery procedures within three categories (cosmetic surgical procedures, cosmetic minimally invasive procedures and reconstructive procedures) and for comparison three potentially elective procedures in general surgery (bariatric surgery, large and small bowel endoscopy) were reviewed.  Regression and correlation analysis were performed using annual time-series economic data from the U.S. Federal Reserve Bank of St. Louis and surgery procedure volume from the National Clearinghouse of Plastic Surgery Statistics and the Centers for Disease Control Health Database.  The statistical significance of the regressions and parameter estimates were established at the 5% confidence level (p=.05) using t and F tests.  A Durbin-Watson test was applied to detect the presence of serial correlation.  Additionally, we examined the income elasticity of demand for the surgical procedures within the same time period. 

Results:  Three measures of consumer income/wealth are examined: the Nominal and Real house price indices as well as Real disposable income.  Depending on the time period and the measure of income/wealth, Cosmetic surgical procedures have an income elasticity of demand (IOD) ranging from

5.45 to -25.14; minimally invasive procedures’ IODs ranged from 33.06 to -5.29; reconstructive procedures ranged from 10.58 to –15.88. The Bariatric surgery regression analysis provided evidence that the change in the demand for this procedure is statistically significantly related to the change in the nominal house price index [b = 4.32 (p=.027), R²=0.29], which is used to proxy for consumer wealth, implying that it is considered a luxury.  Conversely, endoscopy of the small intestine and large intestine are statistically unrelated to changes in consumer wealth or income (p=0.68 and .85, respectively).   

Conclusions:  Consumer wealth (the nominal house price index) is a better predictor of the demand for elective surgical procedures than income.  Nonetheless, income elasticity is extremely variable depending on the time interval examined.  We find the incongruous result that the same surgical procedure can be found to be either a luxury good (IOD>1) or an inferior good (IOD<0). The finding that nominal house prices are related to the demand for specific surgical procedures can aid in forecasting future volume.