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Theoretical Simulation in Health Economics: An application to Grossman's Model of Investment in Health Capital

Katerina Koka (), Audrey Laporte and Brian Ferguson

No 140010, Working Papers from Canadian Centre for Health Economics

Abstract: In this paper we argue on the merits of theoretical simulation, a widely used technique in other areas of theoretical economics, to extending the phase diagram analysis of the Grossman's 1972 model of investment in health capital. We argue that theoretical simulations are particularly useful when considering problems with multiple state variables. To illustrate, we perform simulations with varying assumptions of health depreciation rates and conditional survival probabilities and generate time-plots for the evolution of health capital and health investments over individual finite lifetimes.

Keywords: Theoretical simulation; grossman model; health capital (search for similar items in EconPapers)
JEL-codes: I12 C61 C63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp and nep-hea
Date: 2014-06
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Published Online, June 2014

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