On Adaptation, Life-Extension Possibilities and the Demand for Health
University of Oslo Health Econ. Rsrch. Prog. Working Paper No. 2001:7
37 Pages Posted: 28 Feb 2002
The purpose of this paper is to analyse the impacts of adaptation to a falling health state on the demand for health and medical care. This is done by integrating adaptation processes in the pure consumption model of Grossman. We also modify the model in another direction by introducing an uncertain lifetime. Model simulations show that adaptation affects the health variables by lowering the incentives to invest in health, as well as smoothening the optimal health stock path over the life cycle. Whether or not the risk of mortality is an object of choice has important effects on the joint development of the health variables.
Keywords: Grossman model; Demand for health; Adaptation; Life extension; Ageing
JEL Classification: C61, D91, I12
Suggested Citation: Suggested Citation