Demand for Health Flashcards
Determinants of health?
Medical intervention, education, diet, exercise, heating/housing
How is health demand an individual choice?
- Rational, forward looking
- Constrained by resources
- Utility maximisers
What did the Grossman Model (1972) link?
Model of health production, sets a framework for how resources, behaviour and health all link
Properties of the items in Grossman’s model?
Health is a commodity
Medical care is derived demand
Get value for the consumption properties (utility)
Get value for investment properties (indirect utility from extra time for earning/commodities)
What type of stock is health?
A depreciating stock, which falls in the absence of investment (medical care/exercise) sort of like a form of capital
Who consumes and produces health?
Individuals- are both consumers and producers of health
Why do we not engage in unlimited health investment?
It is timely and costly, we lack the resources
How does the Grossman model form predictions?
By looking at health levels based on changes in price of investments, wages, tech, age and education
What is the basic Grossman equation? List the variables
U = U (xHo , ... , xnHn, Zo.... Zn) U = (Ht, Zt)
T= Lifespan up to n H= Healthy days Z= Consumption of commodity x = Healthy days per unit of of health (Ht)
2 household production functions and their variables for health and household production?
Health production: It = It (Mt, THt; Et)
Other commodities: Zt = Zt (Xt, TZt; Et)
It= Investment in extra health stock Mt = Medical care ( X is good to produce stock) Et = Human capital other than health (Education)
Time constraint for health?
Work + Ill + Producing health + Time Consuming = Healthy days available + Ill days = 365
What is the lifetime budget constraint?
The PV of outlays on goods to the present value of earnings and assets
What is the law of motion of health stock?
The rate of which health depreciates varies, exogenous and dependant on age
Grossman equation for death?
Hn < Hmin
Hmin = Health to survive
Investment returns too low, and depreciation too large so people chose not to invest in health
What does a pure consumption Grossman model say?
Higher investment = better health stock, giving direct utility
What does a pure investment Grossman model say?
Higher investment = better health stock, giving higher income
At the margin, Rate of investment = cost of capitial
What increases the costs in the Grossman model?
Higher cost of investment
Higher interest rate
Higher depreciation rate
What is the cost of health capital?
How much health costs
What is the MEC curve?
The marginal efficiency of capital investments describes the demand for health at the margin (return on investment = cost)
Describe the MEC curves?
Cost of capital: Vertical
Health stock:Horizontal
Foregone Interest + Depreciation: Line across, near the bottom
MEC is a downward sloping curve, intersection of the two lines is the health stock
What does the Grossman model predict about age?
- Depreciation rate increases with age (this horizontal line shifts up)
- Healthy days decreases to maintain equity (intersection is further to left)
What effect does increasing age have on the demand for health care (investment)?
Ambigious, as age/depreciation increase, returns to investment decrease.
If investment returns are larger than decrease in health stock = more investment
Grossman quote on ageing and investment in health?
Biological factors associated with ageing raise the price of human capital and cause individuals to substitute away from future health until death is chosen
What effect does an increase in wages have for the demand for health?
- Increases the MB of health capital
- Income effect, increases demand for health)
- MEC shifts to the right
- Offset by higher opportunity costs to produce health
What effect does an increase in wages have for the demand for health care?
- Rewards for health greater (higher wages)
- Substitution effect, spend more on health care
- Increases demand for health care
What effect does an increase in education have for the demand for health?
- Knowledge raises the marginal product of healthcare (compliant, efficient, better choices, lower depreciation rate)
- Pushes MEC to the right
- More healthy days available (higher curve)
What effect does an increase in education have for the demand for healthcare/ investment in health?
- Increased productivity to produce health so demand falls
- MB of investment increases, so demand may increase (empirical studies show this to be true)
Is the relationship between education and health casual?
Causality is hard to establish, could be linked to time preferences. Need to look into health behaviours more
What reforms does Albouy (2009) investigate?
French reforms raising the leaving age, looks at changes in survival rates
Zay 13-14 in 1923
Berthoin 14-16 in 1953
What does Albouy (2009) conclude in the study?
No significant effect of reform on mortality
What might be the problem with Albouy (2009) study, why did it show no link?
-Mortality may not show other factors of health
-Health returns may be more prominent at younger ages
-Perhaps the additional years were not overly
informative curriculums
What reforms did Lleras-Muney explore (2005)?
Explore state changes to compulsory schooling laws, natural experiment, by exploring mortality rates
What did did Lleras-Muney conclude (2005)?
One additional year of education lowers the probability of dying in the next 10 years by between 1.3 and 3.6% points
Caution using the Lleras-Muney (2005) US paper to create new policies?
Paper analysed low initial levels of education, unclear how to generalise to higher baseline levels
What did Cutler and Lleras-Muney (2010) do a study on?
Studied the mechanisms through which education might impact health behaviours. Using a range of US and UK data sources
Richards (1998) quote on the effect of education/mortality?
“In 1990, a 25-year-old male college graduate could expect to live another 54 year. A high school dropout of the same age could expect to live 8 years fewer.”
How strong is the link with education and health?
Difference in life expectancy by education holds for every demographic group, and is persistent over time
Key health facts about socio-groups and smoking (Lleras-Muney and Cutler, 2010)?
-Each year of education = a 3% point reduction in the prob of smoking
-Effect is non-linear, smoking is greater at higher levels
of education
Key health facts about socio-groups and obesity?
Lleras-Muney and Cutler, 2010
Each education year reduces prob of being obese by 1.4%. Effect is non-linear - obesity declines more for people with over 12 years of education
What is the link between heavy drinking (5 drinks or more) and education?
Each additional year of education lowers prob of heavy drinking by 1.8%. Better educated more likely to drink but less likely to drink heavily
What is the link between preventative behaviours and education?
-More likely to listen to advice, attend screenings, have jabs etc
Is there a link between seatbelt use and education?
Better educated more likely to wear seat belts regularly (increases by around 3.3% for each year of education).
Harms of not wearing seat belt are widely known and
costs are very small
Does income explain some of the education effect on behaviour?
- Income allows the purchase of more goods that protect health.
- Controlling for income the effect of education reduces the effect on health behaviours by around 12%
How much do material resources impact for education on health behaviours?
Material resources are estimated to account for around 20% of the impact of higher education on health behaviours
Do prices affect health behaviours?
Price is not a determinant of health behaviours, not connected with response (E.g. seat belt is free)
How much do knowledge and cognition account for health behaviours?
Between 5 to
30% of the education gradient in behaviours
Do time preferences explain the link between education and health?
Attribute very little of the education gradient in health behaviours to preferences over time and risk
Does personality (self-esteem, self-control etc) explain the education/health links?
Personality traits account for little of the education gradient;
Does social integration (relationships, friends etc) explain the education/health links?
Modest effect: Overall weighted average effect is 7% (US); 15% (UK)
What did Zweifel say about health being an asset?
Health is a hugely valued asset and a pre-requisite for other activities
What did Zweifel say the Grossman model fails to account for?
Ignores stochastic shocks such as a major accident or illness
Mokdad quote on US deaths?
Nearly 1/2 of US deaths are attributed to behavioural factors
Why did Schultz (1975) suggest a link exists between education and health?
Education enhances individuals ability to deal with disequilibrium
Why did Rosenzweig (195) say education helps health?
Education improves an individuals ability to decipher information
What did Schillinger (2006) find about education, literacy and health?
In a low-income population with diabetes, literacy mediated the relationship between education and glycemic control.
Literacy perhaps more important?
