Unit 2 Flashcards
what is the health capital model
how individuals allocate resources to produce health
what is the health production function
mathematical relation of the process of transforming health inputs into health
what is the health production function equation
H = f(health inputs, health state, Xb, Xg)
what are the three reasons people desire good health
provide direct benefits and allows us to undertake activities that provide utility; allows us to work more days, earn more money, therefore increase our levels of consumption; and enables us to live longer
how does health relate to consumption demand
it provides benefits from our consumption demand
how does health relate to our investment demand
it provides benefits from our investment demand
what is health modelled as
a type of human capital
what are the two problems in utility maximization
production problem, and consumption problem
what are the investment assumptions of health
individuals want to maximize their lifetime utility; consumers have perfect knowledge; ability to allocate time between different activities
in the Grossman Model, what are the assumptions
individuals:
- allocate time between work and leisure
- spend leisure time on health and non health activities
- spend earned income on health and non health commodities
- produce health capital that may help in future years
- all in the pursuit of an optimal level of health
how does education affect efficiency
education increases the efficiency with which one can produce health
how does age affect health
age reduces the rate at which an individual can produce health
how does capital stock affect health stock
individuals’ may deplete their health stock in order to replenish other capital stock
what is the invisible hand
the regard for our own self-interest
what are the five characteristics of health care
demand for health care, externalities, information asymmetry, uncertainty, and vulnerability to the integrity of a person
