Health Economics

Summary: Three roles of health in Grossman model An optimal day Production Possibility Frontier for H and X Three roles of health in Grossman model: Health as a  Consumption good : It contributes directly to the individual's utility function each period. Being healthy is valuable in itself. Input into Production : It generates productive time Tp which is useful for producing more H and X. Capital : Unlike the 'other goods', it endures from period to period. It can accumulate (or depreciate) over time. So, improvements in health today can lead to better health tomorrow. An optimal day: The optimal levels of H and X in any given period depends on decisions that are right for a lifetime, not just for a single period. Production Possibility Frontier for H and X: Production Possibility set traces out the possibility of H and X that are attainable given individuals budget and time constrains. The edge or Frontier of this set is called the Production Possibility Frontier (PPF).   ...

Summary: Production of H and X Market Budget Constraint Second Role of Health in Grossman Model Sick time and Productive time Economic Definition of Death  Production of H and X: For both H and X, there are 2 distinct categories of inputs:                              -Market goods                              -Personal time Market inputs: -M: Market inputs for health (e.g.: healthcare or exercise equipment) -J : Market inputs for the 'other goods X' (e.g.: jigsaw puzzle or video games) Production function of Ht:                                Ht = H( Ht-1, Tt, Mt ) Production function of Xt:                                     Xt = X( Tt, Jt) Market Budget Constraint...

Summary: A model of Human Capital Health as Human Capital Single-period utility Time constraint within a single period Difference between H and X A model of Human Capital: Health (H) is a choice and people can choose H. People have the ability to control their level of health. Human Capital is a collection of productive skills embodied in a person that can be used to generate earnings in labor market and to augment household's consumption options. Investment in human capital includes investment in schooling and investment in training during job. Cost of investment includes direct outlays  on market goods and opportunity cost of time. Health as Human capital: Health vs Other Human capital: A person's stock of knowledge affects his market and non market productivity. Health affects the participatory time in working activity. Human capital includes health and information about wages and potential job offers. Several authors have thought of health as human capital. However, Grossma...