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Individual technologies for health - the implications of distinguishing between the ability to produce health investments and the capacity to benefit from those investments

Author

Listed:
  • Bolin, Kristian

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Liljas, Bengt

    (Astra Zeneca, R&D, Mölndal, Sweden)

  • Lindgren, Björn

    (Centre for Health Economics at the University of Gothenburg; Lund University; National Bureau of Economic Research, Cambridge MA, US)

Abstract
People differ in their ability to produce health investments and in their capacity to benefit from such efforts. In this paper, we assume (1) that the individual’s health-investment production function exhibits diminishing returns to scale and (2) that the individual’s capacity to benefit from the investments is diminishing in the stock of health. Previous research has only shown the importance of the first assumption for the health-capital adjustment process. The simultaneous effects go well beyond those results, however. Thus, this paper provides an extended demand-for-health framework that distinguishes between individuals both by their capacities to benefit and by their abilities to produce,when transforming health efforts into health increments. The potential usefulness of this framework for health-policy purposes is demonstrated by solving a numerically specified version of the model, and computing individual welfare effects of medical-care goods changes.

Suggested Citation

  • Bolin, Kristian & Liljas, Bengt & Lindgren, Björn, 2014. "Individual technologies for health - the implications of distinguishing between the ability to produce health investments and the capacity to benefit from those investments," Working Papers in Economics 587, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0587
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    File URL: https://gupea.ub.gu.se/handle/2077/35510
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    References listed on IDEAS

    as
    1. Chang, Fwu-Ranq, 1996. "Uncertainty and investment in health," Journal of Health Economics, Elsevier, vol. 15(3), pages 369-376, June.
    2. Bolin, Kristian & Jacobson, Lena & Lindgren, Bjorn, 2001. "The family as the health producer -- when spouses are Nash-bargainers," Journal of Health Economics, Elsevier, vol. 20(3), pages 349-362, May.
    3. Selden, Thomas M., 1993. "Uncertainty and health care spending by the poor: The health capital model revisited," Journal of Health Economics, Elsevier, vol. 12(1), pages 109-115, April.
    4. Kristian Bolin & Bjorn Lindgren, 2012. "The Double Facetted Nature of Health Investments - Implications for Equilibrium and Stability in a Demand-for-Health Framework," NBER Working Papers 17789, National Bureau of Economic Research, Inc.
    5. Galama, Titus & Kapteyn, Arie, 2011. "Grossman’s missing health threshold," Journal of Health Economics, Elsevier, vol. 30(5), pages 1044-1056.
    6. Caputo,Michael R., 2005. "Foundations of Dynamic Economic Analysis," Cambridge Books, Cambridge University Press, number 9780521842723.
    7. Wagstaff, Adam, 1986. "The demand for health : Some new empirical evidence," Journal of Health Economics, Elsevier, vol. 5(3), pages 195-233, September.
    8. Dardanoni, Valentino & Wagstaff, Adam, 1990. "Uncertainty and the demand for medical care," Journal of Health Economics, Elsevier, vol. 9(1), pages 23-38, June.
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    10. Bolin, Kristian & Jacobson, Lena & Lindgren, Bjorn, 2002. "Employer investments in employee health: Implications for the family as health producer," Journal of Health Economics, Elsevier, vol. 21(4), pages 563-583, July.
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    12. Kenkel, Donald S, 1991. "Health Behavior, Health Knowledge, and Schooling," Journal of Political Economy, University of Chicago Press, vol. 99(2), pages 287-305, April.
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    21. Liljas, Bengt, 2000. "Insurance and imperfect financial markets in Grossman's demand for health model -- a reply to Tabata and Ohkusa," Journal of Health Economics, Elsevier, vol. 19(5), pages 821-827, September.
    22. Liljas, Bengt, 1998. "The demand for health with uncertainty and insurance," Journal of Health Economics, Elsevier, vol. 17(2), pages 153-170, April.
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    24. Titus Galama, 2011. "A Contribution to Health Capital Theory," Working Papers 831, RAND Corporation.
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    Cited by:

    1. Bolin, Kristian & Lindgren, Björn, 2016. "Non-monotonic health behaviours – implications for individual health-related behaviour in a demand-for-health framework," Journal of Health Economics, Elsevier, vol. 50(C), pages 9-26.

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    More about this item

    Keywords

    investments in health; diminishing returns; capacity to benefit; human capital; Grossman model;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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