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

  • Octave Jokung

    ()

  • Serge Macé

    ()

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    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

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    File URL: http://hdl.handle.net/10.1007/s10198-012-0449-9
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    Article provided by Springer in its journal The European Journal of Health Economics.

    Volume (Year): 14 (2013)
    Issue (Month): 6 (December)
    Pages: 1003-1013

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    Handle: RePEc:spr:eujhec:v:14:y:2013:i:6:p:1003-1013
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    14. Wu, Stephen, 2001. "Adapting to heart conditions: a test of the hedonic treadmill," Journal of Health Economics, Elsevier, vol. 20(4), pages 495-507, July.
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    16. Sloan, Frank A. & Kip Viscusi, W. & Chesson, Harrell W. & Conover, Christopher J. & Whetten-Goldstein, Kathryn, 1998. "Alternative approaches to valuing intangible health losses: the evidence for multiple sclerosis1," Journal of Health Economics, Elsevier, vol. 17(4), pages 475-497, August.
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