Optimal health investment and preferences structure

T Azomahou, Bity Diene, Mbaye Diene and Luc Soete ()
Additional contact information
T Azomahou: United Nations University - MERIT
Bity Diene: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Mbaye Diene: UCAD - Université Cheikh Anta Diop de Dakar [Sénégal]

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Abstract: This paper develops a general equilibrium framework to study the role of preferences structure (additive, multiplicative and convex combination of both) in connecting consumption, health investment, stock of health and capital, and their effects on the wage rate and on productivity. We show that the elasticities of health production, health investment and health cost determine jointly how health influences the wage rate. We examine the steady state and the equilibrium dynamics of the model. In the case of additive preferences, the existence of equilibrium and the stability of the dynamic system require that the ratio of the elasticities of the cost of health and health investment is greater than the elasticity of the production function of health. Health stock can have either positive or negative effects on wage rate. The reverse holds for multiplicative preferences and the effect of health stock on wage rate is always positive. L ongevity is a decreasing convex-concave function of the elasticity of inter-temporal substitution of health. We also compare the relative behavior of opportunity costs of health under preferences structure.

Keywords: opportunity costs; longevity; wage rates; preferences structure; health investment; Consumption (search for similar items in EconPapers)
Date: 2015-04-22
New Economics Papers: this item is included in nep-hea
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01144802
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Related works:
Journal Article: Optimal health investment and preference structure (2015)
Working Paper: Optimal health investment and preferences structure (2015)
Working Paper: Optimal health investment and preferences structure (2015)
Working Paper: Optimal health investment and preference structure (2015)
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