health and health care demand. the determinants of health medical care and health education and...
TRANSCRIPT
The Determinants of Health
• Medical Care and Health
• Education and Health
• Income and Health
• Inequality and Health
• Lifestyle and Health
• Environment and Health
Grossman Model
• Investment in health as a form of human capital the Grossman model
• Pure Consumption Model
Practice
• What happens to MEI if someone gets goes to college? What happens to the optimal health stock H? And what happens to demand for health inputs?
• What does this mean for expanding health insurance to less educated?
Practice
• What happens to MEI if someone gets cancer? What happens to the optimal health stock H? And what happens to demand for health inputs?
• Using the Grossman Model what would you predict the differences would be between US citizens and A Citizen of Sub- Saharan Africa (Botswana, Lesotho, etc) in terms of their demand for HIV prevention?
Grossman Model
• Additional factors that affect health in pure consumption model– Age– Wages– Education
Age
• Optimal Health stock demanded still falls with rise in d
• Demand for health care (investment in health) still rises with age.
All Death is Suicide
Since health capital is one component of human capital, a person inherits an initial stock of health that depreciates with age - at an increasing rate at least after some stage in the life cycle - and can be increased by investment. Death occurs when the stock falls below a certain level, and one of the novel features of the model is that individuals "choose" their length of life.
Consumer Utility Theory
• Utility maximization– Income as the Budget Constraint– Change in Relative Prices– Income and Substitution effects
Consumer Utility Theory
• Utility Maximization– Time as the Budget Constraint– The importance of Time– Labor Leisure trade-off
The Demand for Health Care
• Derived from Consumer Utility Maximization
• Price elasticity of demand for medical care– Insert tables on price elasticity
Elasticity
• Elasticity is a general concept that can be used to quantify the response in one variable when another variable changes.
e lastic ity o f A w ith resp ec t to BA
B
%
%
Margin
• Extensive versus Intensive.
• Prescription drugs– Getting prescriptions vs number of
prescriptions
Negative inputs into health production function
• Lifestyle
• Chemical dependency– Rational Addiction
Demand for Unhealthy Goods
• Chart on alcohol drugs, etc
• Rational Addiction– http://en.wikipedia.org/wiki/Rational_addiction
Finkelstein, A., Luttmer, E. F. P., & Notowidigdo, M. (2008). What Good Is Wealth Without Health? The Effect of Health on the Marginal Utility of Consumption.Unpublished manuscript.