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The meaning of death: some numerical simulations of a model of healthy and unhealthy consumption

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  • Martin Forster

Abstract

This paper presents some numerical simulations of a model of healthy and unhealthy consumption to investigate the impact of various terminal conditions on an individual's life-span, pathways of consumption and health. A `benchmark' model, in which both the life-span and the individual's `death' stock of health are xed, is compared to (i) a version in which the `death' stock of health is freely chosen; (ii) a version in which life-span is freely chosen; (iii) a version in which both the `death' stock of health and life-span are freely chosen. Results show how the choice of terminal conditions has a striking impact on both optimal plans and comparative static/dynamic predictions and raise questions about how to model `death' in deterministic demand for health models. Results also illustrate the application of iterative processes to determine an optimal life-span in continuous time models, the role of the marginal value of health capital in determining optimal plans, and the importance of checking the second-order conditions for the optimal choice of life-span in such models.

Suggested Citation

  • Martin Forster, "undated". "The meaning of death: some numerical simulations of a model of healthy and unhealthy consumption," Discussion Papers 00/34, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:00/34
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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2000/0034.pdf
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    References listed on IDEAS

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    1. Léonard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521331586.
    2. 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 223-255, March-Apr.
    3. Caputo, Michael R. & Wilen, James E., 1995. "Optimality conditions and comparative statics for horizon and endpoint choices in optimal control theory," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 351-369.
    4. Ried, Walter, 1998. "Comparative dynamic analysis of the full Grossman model," Journal of Health Economics, Elsevier, vol. 17(4), pages 383-425, August.
    5. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1.
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    7. Ehrlich, Isaac & Chuma, Hiroyuki, 1990. "A Model of the Demand for Longevity and the Value of Life Extension," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 761-782, August.
    8. Forster, Bruce A, 1989. "Optimal Health Investment Strategies," Bulletin of Economic Research, Wiley Blackwell, vol. 41(1), pages 45-57, January.
    9. Grossman, Michael, 1998. "On optimal length of life," Journal of Health Economics, Elsevier, vol. 17(4), pages 499-509, August.
    10. Dorfman, Robert, 1969. "An Economic Interpretation of Optimal Control Theory," American Economic Review, American Economic Association, vol. 59(5), pages 817-831, December.
    11. Eisenring, Christoph, 1999. "Comparative dynamics in a health investment model," Journal of Health Economics, Elsevier, vol. 18(5), pages 653-658, October.
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    Cited by:

    1. Drichoutis, Andreas C. & Lazaridis, Panagiotis & Nayga, Rodolfo M., Jr., 2006. "Nutritional food label use: A theoretical and empirical perspective," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10033, European Association of Agricultural Economists.
    2. Andreas Drichoutis & Panagiotis Lazaridis & Rodolfo Nayga & Maria Kapsokefalou & George Chryssochoidis, 2008. "A theoretical and empirical investigation of nutritional label use," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 9(3), pages 293-304, August.
    3. repec:spr:eurase:v:7:y:2017:i:1:d:10.1007_s40822-016-0059-4 is not listed on IDEAS

    More about this item

    Keywords

    The demand for health; healthy and unhealthy consumption; terminal and transversality conditions; optimal life-span.;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • H0 - Public Economics - - General

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