Wisdom Akpalu (Agricultural Annex University of Pretoria)
Abstract
It has been established in the medical literature that self-medicating with imperfect information about either the use of a genuine or counterfeit drug or based on wrong self-diagnosis of ailment, which is predominant especially in developing countries, is a risky investment in health capital. This paper models the decision to self-medicate and the demand for self-medicated drugs. We suppose that investment in self-medication depends on the perception of its effectiveness. The results obtained show that the decision to self-medicate depends on the relative price and perceived effectiveness of self-medication, the elasticity of the shadow value of health with respect to the quantity of health capital, and the relative effectiveness of self-medication in reducing the unpredictable changes in health capital. Furthermore, if an individual self-medicates, self-medication becomes a normal good: it increases if income increases; and it obeys the law of demand (i.e. it increases if its price, relative to that of the risk-free medication, decreases). Moreover, we have shown that some optimum subsidy can discourage self-medication.
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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2008.5.
Find related papers by JEL classification: I12 - Health, Education, and Welfare - - Health - - - Health Production I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
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