Microeconomics, consumer theory, and the Michael Grossman model: some unexamined issues

Khandakar Q. Elahi

International Journal of Pluralism and Economics Education, 2022, vol. 13, issue 2, 158-175

Abstract: The Michael Grossman model (MGM) is a theoretical cornerstone of health economics that is founded on the basic market model of modern mainstream economics. This basic model, this paper argues, has specific epistemic and logical properties that limit its replication to any applied branch of the discipline. The reason is that it is an 'abstract model', meaning that it has no referent. MGM intends to display the unique features of medical care demand, which disqualifies it its use as the basic market model directly. More specifically, the abstract model needs to be redefined given the unique features of medical care demand. Therefore, MGM inherits some unimprovable difficulties which constrain its usefulness in both pedagogy and policy analysis, which suggests that the MGM demands a critical review and reformulation.

Keywords: health economics; healthcare; Michael Grossman model; MGM; demand for good health; microeconomics; economics pedagogy. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijplur:v:13:y:2022:i:2:p:158-175

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