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A theory of mood-influenced consumption and investment in health

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  • Caputo, Michael R.
  • Levy, Amnon

Abstract

A mood-utility link is incorporated into a theory of rational consumption and investment in personal health, whereby one’s mood worsens as instantaneous utility falls below a threshold but improves as instantaneous utility rises above it. The analysis is conducted within an intertemporal framework, where instantaneous utility is gained and lost and good and bad moods are experienced along a health-dependent random lifespan. The qualitative properties of the resulting optimal control model are investigated by making use of the Frischian form of the feedback demand functions. One of several surprising results derived from this framework is that the marginal value of health can be negative or positive, whereas the marginal values of wealth and mood are unambiguously positive.

Suggested Citation

  • Caputo, Michael R. & Levy, Amnon, 2012. "A theory of mood-influenced consumption and investment in health," Mathematical Social Sciences, Elsevier, vol. 63(3), pages 218-227.
    • Handle: RePEc:eee:matsoc:v:63:y:2012:i:3:p:218-227
    DOI: 10.1016/j.mathsocsci.2012.01.003
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    References listed on IDEAS

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    5. Amnon Levy, 2000. "Would a Rational Lucy Take Off without Assessing the Probability of a Crash Landing?," Eastern Economic Journal, Eastern Economic Association, vol. 26(4), pages 431-437, Fall.
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    8. Levy, Amnon, 2002. "Rational eating: can it lead to overweightness or underweightness?," Journal of Health Economics, Elsevier, vol. 21(5), pages 887-899, September.
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    10. Caputo, Michael R., 1990. "How to do comparative dynamics on the back of an envelope in optimal control theory," Journal of Economic Dynamics and Control, Elsevier, vol. 14(3-4), pages 655-683, October.
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    Cited by:

    1. Narimasa Kumagai & Seiritsu Ogura, 2014. "Persistence of physical activity in middle age: a nonlinear dynamic panel approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(7), pages 717-735, September.

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