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Health and Health Care Demand. The Determinants of Health. Medical Care and Health Education and Health Income and Health Inequality and Health Lifestyle and Health Environment and Health. Grossman. Grossman Model. Investment in health as a form of human capital the Grossman model

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Health and Health Care Demand


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    Presentation Transcript
    1. Health and Health Care Demand

    2. The Determinants of Health • Medical Care and Health • Education and Health • Income and Health • Inequality and Health • Lifestyle and Health • Environment and Health

    3. Grossman

    4. Grossman Model • Investment in health as a form of human capital the Grossman model • Pure Consumption Model

    5. Grossman Model

    6. Age

    7. Wage Effect

    8. Education

    9. Uncertainty

    10. Practice • What happens to MEI if someone gets goes to college? What happens to the optimal health stock H? And what happens to demand for health inputs? • What does this mean for expanding health insurance to less educated?

    11. Practice • What happens to MEI if someone gets cancer? What happens to the optimal health stock H? And what happens to demand for health inputs? • Using the Grossman Model what would you predict the differences would be between US citizens and A Citizen of Sub- Saharan Africa (Botswana, Lesotho, etc) in terms of their demand for HIV prevention?

    12. The Consumption Model • Pure Investment model vs. Pure consumption model

    13. Grossman Model • Additional factors that affect health in pure consumption model • Age • Wages • Education

    14. Age • Optimal Health stock demanded still falls with rise in d • Demand for health care (investment in health) still rises with age.

    15. Health and Wealth

    16. Wage

    17. Education

    18. Research • Studies using the Grossman model • Critiques of the Model

    19. All Death is Suicide Since health capital is one component of human capital, a person inherits an initial stock of health that depreciates with age - at an increasing rate at least after some stage in the life cycle - and can be increased by investment. Death occurs when the stock falls below a certain level, and one of the novel features of the model is that individuals "choose" their length of life.

    20. Consumer Utility Theory • Utility maximization • Income as the Budget Constraint • Change in Relative Prices • Income and Substitution effects

    21. Consumer Utility Theory • Utility Maximization • Time as the Budget Constraint • The importance of Time • Labor Leisure trade-off

    22. Practice

    23. The Demand for Health Care • Derived from Consumer Utility Maximization • Price elasticity of demand for medical care • Insert tables on price elasticity

    24. Elasticity • Elasticity is a general concept that can be used to quantify the response in one variable when another variable changes.

    25. Price Elasticity of Demand

    26. Margin • Extensive versus Intensive. • Prescription drugs • Getting prescriptions vs number of prescriptions

    27. Negative inputs into health production function • Lifestyle • Chemical dependency • Rational Addiction

    28. Demand for Unhealthy Goods • Chart on alcohol drugs, etc • Rational Addiction • http://en.wikipedia.org/wiki/Rational_addiction

    29. Time • Time cost and time price elasticities.

    30. Income Elasticity • Is medical care normal or superior good? (luxury good?)

    31. Finkelstein, A., Luttmer, E. F. P., & Notowidigdo, M. (2008). What Good Is Wealth Without Health? The Effect of Health on the Marginal Utility of Consumption.Unpublished manuscript.

    32. http://youtu.be/D8VZqxcu0I0 Bayesian analysis of testing

    33. Costs? Expenditures = Price X Quantity

    34. Can we rein in the growth of health care expenditures? Not Likely.

    35. The Race to Death Cancer Heart Disease Stroke Diabetes Car Accident

    36. The Race to Death X Cancer Heart Disease Stroke Diabetes Car Accident

    37. The Race to Death Cancer X Heart Disease Stroke Diabetes Car Accident

    38. “Cut half of all medical spending” ~Robin Hanson