A Contribution to Health Capital Theory
Titus J. Galama
USC Center for Economic and Social Research; The RAND Corporation
January 27, 2011
RAND Working Paper Series No. WR-831
This paper presents a theory of the demand for health, health investment and longevity, building on the human capital framework for health and addressing limitations of existing models. It predicts a negative correlation between health investment and health, that the health of wealthy and educated individuals declines more slowly and that they live longer, that current health status is a function of the initial level of health and the histories of prior health investments made, that health investment rapidly increases near the end of life and that length of life is finite as a result of limited life-time resources (the budget constraint). It derives a structural relation between health and health investment (e.g., medical care) that is suitable for empirical testing.
Number of Pages in PDF File: 48
Keywords: socioeconomic status, education, health, demand for health, health capital, medical care, life cycle, age, labor, mortality
JEL Classification: D91, I10, I12, J00, J24
Date posted: January 27, 2011
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