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Endogenous Health in a Model of Calories, Medical Services and Health Shocks

  • Pedro Gomis Porqueras

    ()

  • Solmaz Moslehi

    ()

  • Richard M. H. Suen

This paper presents a theoretical framework that incorporates both preventive actions and treatment opportunities to study health outcomes. In particular, we allow for an agent's eating decision to alter the distribution of future health shocks. Once a shock is realized medical care can be used to improve her health. Thus, choosing a healthier diet is a form of self-protection while medical expenditures are a form of self-insurance. The model helps rationalize why agents choose to be overweight even though they are fully aware of its adverse health consequences. Moreover, this framework predicts that wealthier individuals, on average, have lower morbidity rates and lead a healthier lifestyle. Finally, our numerical exercise captures U.S. cross-sectional facts regarding the choice of diet, medical expenditures as well as health and non-food expenditures.

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File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2013_4.pdf
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Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2013_4.

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Date of creation: 25 Oct 2013
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Handle: RePEc:dkn:econwp:eco_2013_4
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Web page: http://www.deakin.edu.au/buslaw/aef/index.php

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  1. Hans van Kippersluis & Tom van Ourti & Owen O'Donnell & Eddy van Doorslaer, 2008. "Health and Income across the Life Cycle and Generations in Europe," Tinbergen Institute Discussion Papers 08-009/3, Tinbergen Institute.
  2. DE LA CROIX, David & PONTHIÈRE, Grégory, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," CORE Discussion Papers 2008049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Juergen Jung & Chung Tran, 2011. "Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010," Working Papers 201102, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
  4. Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-74, June.
  5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
  6. Angus Deaton, 2003. "Health, Inequality, and Economic Development," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 113-158, March.
  7. Dragone, Davide & Savorelli, Luca, 2012. "Thinness and obesity: A model of food consumption, health concerns, and social pressure," Journal of Health Economics, Elsevier, vol. 31(1), pages 243-256.
  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.
  9. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  10. Jusot, Florence & Kunst, Anton E. & Leinsalu, Mall & Menvielle, Gwenn & Schaap, Maartje M. & Roskam, Albert-Jan R. & Stirbu, Irina & Mackenbach, Johan P., 2008. "Socioeconomic Inequalities in Health in 22 European Countries," Economics Papers from University Paris Dauphine 123456789/10510, Paris Dauphine University.
  11. Contoyannis, Paul & Jones, Andrew M., 2004. "Socio-economic status, health and lifestyle," Journal of Health Economics, Elsevier, vol. 23(5), pages 965-995, September.
  12. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  13. Dragone, Davide, 2009. "A rational eating model of binges, diets and obesity," Journal of Health Economics, Elsevier, vol. 28(4), pages 799-804, July.
  14. Shishu Zhang & Gregory J. Soukup, 2012. "Analysis of the Medical Expenditure Panel Survey and the impact of family structure on children's well-being in the United States," Applied Economics Letters, Taylor & Francis Journals, vol. 19(18), pages 1879-1883, December.
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