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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

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Date posted: January 27, 2011  

Suggested Citation

Galama, Titus J., A Contribution to Health Capital Theory (January 27, 2011). RAND Working Paper Series No. WR-831. Available at SSRN: http://ssrn.com/abstract=1749712 or http://dx.doi.org/10.2139/ssrn.1749712

Contact Information

Titus J. Galama (Contact Author)
USC Center for Economic and Social Research ( email )
Playa Vista, CA
United States
+310 430 6358 (Phone)
The RAND Corporation ( email )
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States
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