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On adaptation, life-extension possibilities and the demand for health

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Author Info
Gjerde, Jon (Norwegian Computing Center)
Grepperud, Sverre () (Institute of Health Management and Health Economics)
Kverndokk, Snorre () (Ragnar Frisch Centre for Economic Research)

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Abstract

A good health is important for having a good life. This is supported by surveys on happiness. However, at least after a certain age, the health state deteriorates naturally over time due to ageing. Nevertheless, research reports show that old people in average are satisfied with their health conditions. This and other empirical evidence indicate that individuals adapt to poorer health conditions. But how will this adaptation influence the demand for health services?

Gjerde, Grepperud and Kverndokk will in this paper analyse the impacts of adaptation to a falling health state on the demand for health and medical care. This is done by integrating adaptation processes in the pure consumption model of Grossman. The authors will modify the consumption-model in another direction by introducing an uncertain lifetime. Model simulations show that adaptation affects the health variables by lowering the incentives to invest in health, as well as smoothening the optimal health stock path over the life cycle. Whether or not the risk of mortality is an object of choice has important effects on the joint development of the health variables.

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Publisher Info
Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2001:7.

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Length: 37 pages
Date of creation: 30 Jun 2009
Date of revision:
Handle: RePEc:hhs:oslohe:2001_007

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Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
Phone: 2307 5309
Fax: 2307 5310
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Related research
Keywords: Grossman; Demand for health; Adaptation; Life extension; Ageing.;

Find related papers by JEL classification:
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
I12 - Health, Education, and Welfare - - Health - - - Health Production

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Grossman, Michael, 1998. "On optimal length of life," Journal of Health Economics, Elsevier, vol. 17(4), pages 499-509, August. [Downloadable!] (restricted)
  2. Jon Gjerde, Sverre Grepperud and Snorre Kverndokk, 1998. "Optimal Climate Policy under the Possibility of a Catastrophe," Discussion Papers 209, Research Department of Statistics Norway. [Downloadable!]
    Other versions:
  3. Jacobson, Lena, 2000. "The family as producer of health -- an extended grossman model," Journal of Health Economics, Elsevier, vol. 19(5), pages 611-637, September. [Downloadable!] (restricted)
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  5. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr. [Downloadable!] (restricted)
  6. Wolfe, John R, 1985. "A Model of Declining Health and Retirement," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1258-67, December. [Downloadable!] (restricted)
  7. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    Other versions:
  8. Cropper, M L, 1977. "Health, Investment in Health, and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1273-94, December. [Downloadable!] (restricted)
  9. Eisenring, Christoph, 1999. "Comparative dynamics in a health investment model," Journal of Health Economics, Elsevier, vol. 18(5), pages 653-658, October. [Downloadable!] (restricted)
  10. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September. [Downloadable!] (restricted)
  11. Oniki, Hajime, 1973. "Comparative dynamics (sensitivity analysis) in optimal control theory," Journal of Economic Theory, Elsevier, vol. 6(3), pages 265-283, June. [Downloadable!] (restricted)
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  13. Ehrlich, Isaac, 2000. "Uncertain lifetime, life protection, and the value of life saving," Journal of Health Economics, Elsevier, vol. 19(3), pages 341-367, May. [Downloadable!] (restricted)
  14. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March. [Downloadable!] (restricted)
  15. Ehrlich, Isaac & Chuma, Hiroyuki, 1990. "A Model of the Demand for Longevity and the Value of Life Extension," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 761-82, August. [Downloadable!] (restricted)
  16. Pollak, Robert A., 1976. "Habit formation and long-run utility functions," Journal of Economic Theory, Elsevier, vol. 13(2), pages 272-297, October. [Downloadable!] (restricted)
  17. Ried, Walter, 1998. "Comparative dynamic analysis of the full Grossman model," Journal of Health Economics, Elsevier, vol. 17(4), pages 383-425, August. [Downloadable!] (restricted)
  18. Kverndokk, Snorre, 2009. "Why do people demand health?," HERO On line Working Paper Series 2000:5, Oslo University, Health Economics Research Programme. [Downloadable!]
  19. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June. [Downloadable!] (restricted)
  20. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May. [Downloadable!] (restricted)
  21. Frank, Robert H, 1989. "Frames of Reference and the Quality of Life," American Economic Review, American Economic Association, vol. 79(2), pages 80-85, May. [Downloadable!] (restricted)
  22. Groot, Wim, 2000. "Adaptation and scale of reference bias in self-assessments of quality of life," Journal of Health Economics, Elsevier, vol. 19(3), pages 403-420, May. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Azomahou, Theophile & Diene, Bity & Soete, Luc, 2009. "The role of consumption and the financing of health investment under epidemic shocks," UNU-MERIT Working Paper Series 006, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology. [Downloadable!]
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