Grossman's Missing Health Threshold
AbstractThe authors 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. Their generalized solution addresses a significant criticism: the model's prediction that health and medical care are positively related is consistently rejected by the data. They suggest structural and reduced form equations to test their generalized solution and contrast the predictions of the model with the empirical literature.
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Bibliographic InfoPaper provided by RAND Corporation Publications Department in its series Working Papers with number 684.
Length: 42 pages
Date of creation: May 2009
Date of revision:
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Other versions of this item:
- I10 - Health, Education, and Welfare - - Health - - - General
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- J00 - Labor and Demographic Economics - - General - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Galama and Kapteyn: Grossman's Missing Threshold
by Liam Delaney in Geary Behaviour Centre on 2009-12-23 02:29:00
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