Going from Bad to Worse: Adaptation to Poor Health, Health Spending, Longevity, and the Value of Life

Johannes Schünemann, Holger Strulik and Timo Trimborn

VfS Annual Conference 2016 (Augsburg): Demographic Change from Verein für Socialpolitik / German Economic Association

Abstract: Unhealthy persons adapt to their bad state of health and persons in bad health are usually happier than estimated by healthy persons. In this paper we investigate how adaptation to a deteriorating state of health affects health spending, life expectancy, and the value of life. We set up a life cycle model in which individuals are subject to physiological aging, calibrate it with data from gerontology, and compare behavior and outcomes of adapting and non-adapting individuals. While adaptation generally increases the life-time utility (by about 2 percent), its impact on health behavior and longevity depends crucially on whether individuals are aware of their adaptive behavior, i.e. whether they adapt in a naive or sophisticated way. We also compute the QALY change implied by health shocks and discuss whether and how adaptation influences results and the desireability of positive health innovations.

JEL-codes: D91 I12 J17 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-age and nep-hea
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Going from bad to worse: Adaptation to poor health health spending, longevity, and the value of life (2017)
Working Paper: Going from bad to worse: Adaptation to poor health, health spending, longevity, and the value of life (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc16:145571

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