The Double Facetted Nature of Health Investments - Implications for Equilibrium and Stability in a Demand-for-Health Framework / Kristian Bolin, Bjorn Lindgren.

Format:

Book

Author/Creator:

Bolin, Kristian.

Contributor:

National Bureau of Economic Research.

Lindgren, Bjorn.

Series:

Working Paper Series (National Bureau of Economic Research) no. w17789.

NBER working paper series no. w17789

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

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.

Notes:

Print version record

January 2012.