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A Closed-form Solution for the Health Capital Model

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  • Holger STRULIK

    (University of Goettingen)

Abstract

This paper provides a closed-form solution for the health capital model of health demand. The results are exploited in order to prove analytically the comparative dynamics of the model. Results are derived for the so-called pure investment model, the pure consumption model and a combination of both types of models. Given the plausible assumptions that (i) health declines with age and that (ii) the health capital stock at death is lower than the health capital stock needed for eternal life, it is shown that the optimal solution implies eternal life.

Suggested Citation

  • Holger STRULIK, 2015. "A Closed-form Solution for the Health Capital Model," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 301-316, September.
  • Handle: RePEc:ctl:louvde:v:81:y:2015:i:3:p:301-316
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    File URL: http://dx.doi.org/10.1017/dem.2015.4
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    References listed on IDEAS

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    1. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
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    3. Grossman, Michael, 2000. "The human capital model," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 7, pages 347-408 Elsevier.
    4. Cropper, M L, 1977. "Health, Investment in Health, and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1273-1294, December.
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    6. Strulik, Holger, 2011. "Health and Education: Understanding the Gradient," Hannover Economic Papers (HEP) dp-487, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    7. van Kippersluis, Hans & Galama, Titus J., 2014. "Wealth and health behavior: Testing the concept of a health cost," European Economic Review, Elsevier, vol. 72(C), pages 197-220.
    8. Galama, Titus & Kapteyn, Arie, 2011. "Grossman’s missing health threshold," Journal of Health Economics, Elsevier, vol. 30(5), pages 1044-1056.
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    11. Carl-Johan Dalgaard & Holger Strulik, 2017. "The Genesis of the Golden Age: Accounting for the Rise in Health and Leisure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 132-151, March.
    12. Meier, Volker, 2000. "On the demand for preventive care," Munich Reprints in Economics 19191, University of Munich, Department of Economics.
    13. Havranek, Tomas & Horvath, Roman & Irsova, Zuzana & Rusnak, Marek, 2015. "Cross-country heterogeneity in intertemporal substitution," Journal of International Economics, Elsevier, vol. 96(1), pages 100-118.
    14. 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.
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    18. Ried, Walter, 1998. "Comparative dynamic analysis of the full Grossman model," Journal of Health Economics, Elsevier, vol. 17(4), pages 383-425, August.
    19. Carl-Johan Dalgaard & Holger Strulik, 2014. "Optimal Aging And Death: Understanding The Preston Curve," Journal of the European Economic Association, European Economic Association, vol. 12(3), pages 672-701, June.
    20. Muurinen, Jaana-Marja, 1982. "Demand for health: A generalised Grossman model," Journal of Health Economics, Elsevier, vol. 1(1), pages 5-28, May.
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    Citations

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    Cited by:

    1. repec:eee:jhecon:v:54:y:2017:i:c:p:79-90 is not listed on IDEAS
    2. Titus Galama, 2011. "A Contribution to Health Capital Theory," Working Papers WR-831, RAND Corporation.
    3. D. Dragone & H. Strulik, 2017. "Human Health and Aging over an Infinite Time Horizon," Working Papers wp1104, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. repec:eee:jeborg:v:140:y:2017:i:c:p:130-146 is not listed on IDEAS
    5. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "The gender gap in mortality: How much is explained by behavior?," Journal of Health Economics, Elsevier, vol. 54(C), pages 79-90.
    6. Carl-Johan Dalgaard & Holger Strulik, 2017. "The Genesis of the Golden Age: Accounting for the Rise in Health and Leisure," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 132-151, March.
    7. Trimborn, Timo & Schünemann, Johannes & Strulik, Holger, 2016. "Disentangling the Gender Gap in Longevity," Annual Conference 2016 (Augsburg): Demographic Change 145570, Verein für Socialpolitik / German Economic Association.
    8. Strulik, Holger, 2017. "Smoking kills: An economic theory of addiction, health deficit accumulation, and longevity," Center for European, Governance and Economic Development Research Discussion Papers 316, University of Goettingen, Department of Economics.
    9. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "Going from bad to worse: Adaptation to poor health health spending, longevity, and the value of life," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 130-146.
    10. Strulik, Holger, 2018. "An economic heory of depression and its impact on health behavior and longevity," Center for European, Governance and Economic Development Research Discussion Papers 337, University of Goettingen, Department of Economics.
    11. repec:eee:joecag:v:6:y:2015:i:c:p:5-12 is not listed on IDEAS
    12. Bolin, Kristian & Caputo, Michael R., 2017. "Consumption and Investment Demand when Health Evolves Stochastically," Working Papers in Economics 710, University of Gothenburg, Department of Economics.

    More about this item

    Keywords

    Longevity; Aging; Health; Health care demand;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General

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