Grossman_Presentation

Grossman_Presentation - Setup Theoretical Results Testing...

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Unformatted text preview: Setup Theoretical Results Testing the Model Grossman Model of Health Demand Presented by Tim Kautz Econ 350, Winter 2010 Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model Outline 1 Setup Motivation The Model 2 Theoretical Results The General Case Pure Investment Case 3 Testing the Model Empirical Speci cation Results Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model Health is a Unique Good People produce health using health services and time Health is a form of capital that depreciates over time Health enters directly into the utility function and a ects available time Health a ects the length of people's lives Health interacts with other forms of human capital like education Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model Outline 1 Setup Motivation The Model 2 Theoretical Results The General Case Pure Investment Case 3 Testing the Model Empirical Speci cation Results Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model People Maximize Utility Utility Function: U ( φ H ,... φ n H n , Z ,... Z n ) H t- Health stock in period t φ t- Factor that converts health stock into healthy time Z t- Other commodities Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model People Produce Health and Other Goods Production of Health Health production: I t = I t ( M t , TH t ; E ) (CRS) M t- Medical services TH t- Time spent producing health E- Education level (exogenous) Production of Other Commodities Household Production: Z t = Z t ( X t , T t ; E ) X t- Goods inputs TH t- Time spent producing Other Commodities E- Education level (exogenous) Presented by Tim Kautz Grossman Model of Health Demand Setup Theoretical Results Testing the Model Motivation The Model The Constraints Time constraint TW t | {z } Working + TL t |{z} Sick + TH t |{z} Health Inv. + T t |{z} Leisure = Ω |{z} Total Time Law of motion for health: H t + 1 = I t +( 1- δ t ) H t Goods budget constraint: Σ P t M t + V t X t + W t ( TL t + TH t + T t ) ( 1 + r ) t = Σ W t Ω ( 1 + r ) t + A Presented by Tim Kautz Grossman Model of Health Demand Setup...
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