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Going from Bad to Worse: Adaptation to Poor Health, Health Spending, Longevity, and the Value of Life

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  • Schünemann, Johannes
  • Strulik, Holger
  • Trimborn, Timo

Abstract

Unhealthy persons adapt to their bad state of health and persons in bad health are usually happier than estimated by healthy persons. In this paper we investigate how adaptation to a deteriorating state of health affects health spending, life expectancy, and the value of life. We set up a life cycle model in which individuals are subject to physiological aging, calibrate it with data from gerontology, and compare behavior and outcomes of adapting and non-adapting individuals. While adaptation generally increases the life-time utility (by about 2 percent), its impact on health behavior and longevity depends crucially on whether individuals are aware of their adaptive behavior, i.e. whether they adapt in a naive or sophisticated way. We also compute the QALY change implied by health shocks and discuss whether and how adaptation influences results and the desireability of positive health innovations.

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  • Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2016. "Going from Bad to Worse: Adaptation to Poor Health, Health Spending, Longevity, and the Value of Life," Annual Conference 2016 (Augsburg): Demographic Change 145571, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc16:145571
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    Cited by:

    1. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "The gender gap in mortality: How much is explained by behavior?," Journal of Health Economics, Elsevier, vol. 54(C), pages 79-90.
    2. Trimborn, Timo & Schünemann, Johannes & Strulik, Holger, 2016. "Disentangling the Gender Gap in Longevity," Annual Conference 2016 (Augsburg): Demographic Change 145570, Verein für Socialpolitik / German Economic Association.
    3. Strulik, Holger & Trimborn, Timo, 2018. "Hyperbolic discounting can be good for your health," Journal of Economic Psychology, Elsevier, vol. 69(C), pages 44-57.
    4. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2019. "Anticipation of deteriorating health and information avoidance," Center for European, Governance and Economic Development Research Discussion Papers 365, University of Goettingen, Department of Economics.
    5. Sanchez-Romero, Miguel & Fürnkranz-Prskawetz, Alexia, 2019. "Optimal time allocation in active retirement," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 02/2019, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    6. repec:eee:jeborg:v:158:y:2019:i:c:p:269-287 is not listed on IDEAS
    7. Strulik, Holger, 2019. "From pain patient to junkie: An economic theory of painkiller consumption and its impact on wellbeing and longevity," Center for European, Governance and Economic Development Research Discussion Papers 359, University of Goettingen, Department of Economics.
    8. Sebastian Böhm & Volker Grossmann & Holger Strulik, 2018. "R&D-Driven Medical Progress, Health Care Costs, and the Future of Human Longevity," CESifo Working Paper Series 6897, CESifo Group Munich.
    9. Strulik, Holger, 2018. "The return to education in terms of wealth and health," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 1-14.
    10. Böhm, Sebastian & Grossmann, Volker & Strulik, Holger, 2017. "The Future of Human Health, Longevity, and Health Costs," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168288, Verein für Socialpolitik / German Economic Association.
    11. Strulik, Holger, 2018. "Smoking kills: An economic theory of addiction, health deficit accumulation, and longevity," Journal of Health Economics, Elsevier, vol. 62(C), pages 1-12.
    12. Böhm, Sebastian & Grossmann, Volker & Strulik, Holger, 2017. "R&D-driven medical progess, health care costs, and the future of human longevity," Center for European, Governance and Economic Development Research Discussion Papers 325, University of Goettingen, Department of Economics.
    13. Johannes Schuenemann & Holger Strulik & Timo Trimborn, . "The Marriage Gap: Optimal Aging and Death in Partnerships," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
    14. Strulik, Holger, 2018. "I shouldn't eat this donut: Self-control, body weight, and health in a life cycle model," Center for European, Governance and Economic Development Research Discussion Papers 360, University of Goettingen, Department of Economics.
    15. Strulik, Holger, 2019. "An economic theory of depression and its impact on health behavior and longevity," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 269-287.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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