EconPapers    
Economics at your fingertips  
 

Optimal health investment and preference structure

Théophile Azomahou (), Bity Diene (), Mbaye Diene () and Luc Soete

Economic Theory, 2015, vol. 60, issue 3, 565 pages

Abstract: This paper develops a general equilibrium framework to study the role of preference structure (additive, multiplicative and a convex combination of the two) 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 wages via a mechanism of reservation wages. When preferences are multiplicative, the condition of the existence of equilibrium and the stability of the dynamic system reverse, and the effect of health stock on wages is always positive. Longevity 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 preference structure. Copyright The Author(s) 2015

Keywords: Consumption; Health investment; Wage; Longevity; Opportunity costs; C61; C62; I15; E21 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s00199-015-0896-5 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Optimal health investment and preferences structure (2015) Downloads
Working Paper: Optimal health investment and preference structure (2015)
Working Paper: Optimal health investment and preferences structure (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joecth:v:60:y:2015:i:3:p:521-565

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/199/PS2

DOI: 10.1007/s00199-015-0896-5

Access Statistics for this article

Economic Theory is currently edited by Nichoals Yanneils

More articles in Economic Theory from Springer, Society for the Advancement of Economic Theory (SAET) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2021-10-16
Handle: RePEc:spr:joecth:v:60:y:2015:i:3:p:521-565