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A closed-form solution for the health capital model

Holger Strulik ()

No 222, Center for European, Governance and Economic Development Research Discussion Papers from University of Goettingen, Department of Economics

Abstract: This paper provides a closed-form solution for the health capital model of health demand. The results are exploited in order to prove analytically the comparative dynamics of the model. Results are derived for the so called pure investment model, the pure consumption model and a combination of both types of models. Given the plausible assumptions that (i) health declines with age and that (ii) the health capital stock at death is lower than the health capital stock needed for eternal life, it is shown that the optimal solution always implies eternal life. This outcome occurs independently from the initial stock of health, the impact of health on productivity, and the importance of health for utility and it is robust against the introduction of a finite age-dependent rate of health depreciation.

Keywords: longevity; health; health care demand (search for similar items in EconPapers)
JEL-codes: D91 J17 J26 I12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: 2014
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Journal Article: A Closed-form Solution for the Health Capital Model (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:222

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