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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. 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.
  2. 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.
  3. Angus Deaton, 2002. "Health, inequality, and economic development," Working Papers 270, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  4. 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..
  5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
  6. 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.
  7. Levy, Amnon, 2002. "Rational eating: can it lead to overweightness or underweightness?," Journal of Health Economics, Elsevier, vol. 21(5), pages 887-899, September.
  8. Juergen Jung & Chung Tran, 2014. "Market Inefficiency, Insurance Mandate and Welfare: U.S. Health Care Reform 2010," Working Papers 2014-01, Towson University, Department of Economics, revised Sep 2014.
  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. 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.
  11. van Kippersluis, Hans & Van Ourti, Tom & O'Donnell, Owen & van Doorslaer, Eddy, 2009. "Health and income across the life cycle and generations in Europe," Journal of Health Economics, Elsevier, vol. 28(4), pages 818-830, July.
  12. Dragone, Davide, 2009. "A rational eating model of binges, diets and obesity," Journal of Health Economics, Elsevier, vol. 28(4), pages 799-804, July.
  13. David De La Croix & Grégory Ponthière, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," PSE Working Papers halshs-00586242, HAL.
  14. repec:dgr:uvatin:20080009 is not listed on IDEAS
  15. Contoyannis, Paul & Jones, Andrew M., 2004. "Socio-economic status, health and lifestyle," Journal of Health Economics, Elsevier, vol. 23(5), pages 965-995, September.
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