NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Double Facetted Nature of Health Investments - Implications for Equilibrium and Stability in a Demand-for-Health Framework

Kristian Bolin, Bjorn Lindgren

NBER Working Paper No. 17789
Issued in January 2012
NBER Program(s):   HE

A number of behaviours influence health in a non-monotonic way. Physical activity and alcohol consumption, for instance, may be beneficial to one’s health in moderate but detrimental in large quantities. We develop a demand-for-health framework that incorporates the feature of a physiologically optimal level. An individual may still choose a physiologically non-optimal level, because of the trade-off in his or her preferences for health versus other utility-affecting commodities. However, any deviation from the physiologically optimal level will be punished with respect to health. A set of steady-state comparative statics is derived regarding the effects on the demand for health and health-related behaviour, indicating that individuals react differently to exogenous changes, depending on the amount of the health-related behaviour they demand. We also show (a) that a steady-state equilibrium is a saddle-point and (b) that the physiologically optimal level may be a steady-state equilibrium for the individual. Our analysis suggests that general public-health policies may, to some extent, be counterproductive due to the responses induced in part of the population.

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w17789

Users who downloaded this paper also downloaded these:
Kearney and Levine w17965 Why is the Teen Birth Rate in the United States so High and Why Does it Matter?
Oster, Shoulson, and Dorsey w17931 Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease
Aron-Dine, Einav, Finkelstein, and Cullen w17802 Moral Hazard in Health Insurance: How Important Is Forward Looking Behavior?
Barcellos, Carvalho, and Lleras-Muney w17781 Child Gender And Parental Investments In India: Are Boys And Girls Treated Differently?
Cutler and Lleras-Muney w17738 Education and Health: Insights from International Comparisons
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us