Individual Investments in Education and Health

Health Economics Research Network at the University of Oslo: HERO Working Paper 2014: 1

55 Pages Posted: 1 Apr 2014

See all articles by Jared C. Carbone

Jared C. Carbone

University of Calgary - Department of Economics

Snorre Kverndokk

Ragnar Frisch Centre for Economic Research

Date Written: March 31, 2014

Abstract

Empirical studies show that years of schooling are positively correlated with good health. The implication may go from education to health, from health to education, and from factors that influence both variables. We formalize a model that determines an individual’s demand for knowledge and health based on the causal effects, and study the impacts of policy instruments such as subsidies on medical care, subsidizing schooling, income tax reduction, lump sum transfers and improving health at young age. Our results indicate that income transfers such as distributional policies may be the best instrument to improve welfare, while medical care subsidies is the best instrument for longevity. Subsidies to medical care or education would require large imperfections for health and education to be more welfare improving than distributional policies. Our simulations suggest that underlying factors that impact both health and education may be the main explanation for the correlation shown empirically.

Keywords: Demand for health, Demand for education, Human capital, Numerical modeling, Causality

JEL Classification: C61, D91, I12, I21

Suggested Citation

Carbone, Jared C. and Kverndokk, Snorre, Individual Investments in Education and Health (March 31, 2014). Health Economics Research Network at the University of Oslo: HERO Working Paper 2014: 1. Available at SSRN: https://ssrn.com/abstract=2418149 or http://dx.doi.org/10.2139/ssrn.2418149

Jared C. Carbone

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Snorre Kverndokk (Contact Author)

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47 22958811 (Phone)
+47 22958825 (Fax)

HOME PAGE: http://www.frisch.uio.no/cv/snorrek_eng.html

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