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Long-term health investment when people underestimate their adaptation to old age-related health problems

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  • Octave Jokung

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  • Serge Macé

    ()

Abstract

This paper explores in a two-period model the economic implications of people’s tendency to underestimate their ability to adapt to age-related health problems. We model this misperception by assuming that the individual underestimates his future subjective health. Under standard assumptions, we show that, when people allocate their resources during their youth between present consumption, savings, and health investment, they invest more in health as long as the magnitude of the cross-marginal utility of health and consumption is not too negative. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Octave Jokung & Serge Macé, 2013. "Long-term health investment when people underestimate their adaptation to old age-related health problems," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(6), pages 1003-1013, December.
  • Handle: RePEc:spr:eujhec:v:14:y:2013:i:6:p:1003-1013
    DOI: 10.1007/s10198-012-0449-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Health investment; Aging; Hedonic adaptation; I12; D91;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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