Theoretical Simulation in Health Economics: An application to Grossman's Model of Investment in Health Capital
In this paper we argue on the merits of theoretical simulation, a widely used technique in other areas of theoretical economics, to extending the phase diagram analysis of the Grossman's 1972 model of investment in health capital. We argue that theoretical simulations are particularly useful when considering problems with multiple state variables. To illustrate, we perform simulations with varying assumptions of health depreciation rates and conditional survival probabilities and generate time-plots for the evolution of health capital and health investments over individual finite lifetimes.
|Date of creation:||Jun 2014|
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|Publication status:||Published Online, June 2014|
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- Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, 07.
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