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Grossman’s missing health threshold

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  • Galama, Titus
  • Kapteyn, Arie

Abstract

We present a generalized solution to Grossman’s model of health capital (1972), relaxing the widely used assumption that individuals can adjust their health stock instantaneously to an “optimal” level without adjustment costs. The Grossman model then predicts the existence of a health threshold above which individuals do not demand medical care. Our generalized solution addresses a significant criticism: the model’s prediction that health and medical care are positively related is consistently rejected by the data. We suggest structural- and reduced-form equations to test our generalized solution and contrast the predictions of the model with the empirical literature.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 30 (2011)
Issue (Month): 5 ()
Pages: 1044-1056

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Handle: RePEc:eee:jhecon:v:30:y:2011:i:5:p:1044-1056

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Web page: http://www.elsevier.com/locate/inca/505560

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Keywords: Health; Demand for health; Health capital; Medical care; Labor;

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References

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  3. Finkelstein, Amy & Luttmer, Erzo F. P. & Notowidigdo, Matthew J., 2008. "What Good Is Wealth without Health? The Effect of Health on the Marginal Utility of Consumption," Working Paper Series rwp08-036, Harvard University, John F. Kennedy School of Government.
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  21. van Kippersluis, Hans & O'Donnell, Owen & van Doorslaer, Eddy & Van Ourti, Tom, 2010. "Socioeconomic differences in health over the life cycle in an Egalitarian country," Social Science & Medicine, Elsevier, vol. 70(3), pages 428-438, February.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Galama and Kapteyn: Grossman's Missing Threshold
    by Liam Delaney in Geary Behaviour Centre on 2009-12-23 02:29:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Fabrizio Mazzona & Franco Peracchi, 2010. "Ageing, cognitive abilities and retirement," EIEF Working Papers Series 1015, Einaudi Institute for Economics and Finance (EIEF), revised Jan 2012.
  2. Audrey Laporte, 2014. "Should the Grossman model retain its Iconic status in health economics?," Working Papers 140003, Canadian Centre for Health Economics.
  3. Titus J. Galama & Patrick Hullegie & Erik Meijer & Sarah Outcault, 2012. "Is There Empirical Evidence For Decreasing Returns To Scale In A Health Capital Model?," Health Economics, John Wiley & Sons, Ltd., vol. 21(9), pages 1080-1100, 09.
  4. Bolin, Kristian & Liljas, Bengt & Lindgren, Björn, 2014. "Individual technologies for health - the implications of distinguishing between the ability to produce health investments and the capacity to benefit from those investments," Working Papers in Economics 587, University of Gothenburg, Department of Economics.
  5. Titus J. Galama & Hans van Kippersluis, 2010. "A Theory of Socioeconomic Disparities in Health over the Life Cycle," Tinbergen Institute Discussion Papers 10-079/3, Tinbergen Institute.
  6. Peter Zweifel, 2012. "The Grossman model after 40 years," The European Journal of Health Economics, Springer, vol. 13(6), pages 677-682, December.
  7. Bolin, Kristian & Lindgren, Björn, 2014. "Non-monotonic health behaviours - implications for individual health-related behaviour in a demand-for-health framework," Working Papers in Economics 588, University of Gothenburg, Department of Economics.
  8. Hullegie, P.G.J., 2012. "Essays on health and labor economics," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5637283, Tilburg University.

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