The Dynamics of Health
TL;DR: In this paper, the authors developed a dynamic model for health and solution of the dynamic optimisation problem leads to optimal life-cycle health paths, gross investment in each period, consumption of medical care (which is seen as a derived demand) and time inputs in the gross investment function.
Abstract: Health has long been considered as a fundamental commodity in economic analyses; Michael Grossman (2000) cites Bentham as recognizing that the ‘relief of pain’ is one of the basic arguments in the utility function. Health was viewed both as an investment in human capital and as an output of a household production process by Grossman (1972a & b), the founding father of demand for health models. In the Grossman model, health is both demanded for utility reasons - it is good to feel well - and for investment reasons – to make more healthy time available for market and non-market activities. Grossman developed a dynamic model for health and solution of the dynamic optimisation problem leads to optimal life-cycle health paths, gross investment in each period, consumption of medical care (which is seen as a derived demand) and time inputs in the gross investment function in each period. By comparing maximum lifetime utility for different lengths of life, it also allows endogenous determination of the length of life. Usually the comparative static and dynamic analyses are performed on sub-models where either the consumption benefits are assumed to equal zero (the investment model), or the investment benefits are assumed to equal zero (the consumption model). We focus on the investment model as sharper predictions are available; this model results in a condition which determines the optimal stock of health in any period and shows that the rate of return on capital (or, marginal efficiency of capital, MEC) must equal the opportunity cost of capital. Increases in the depreciation rate over time cause the optimal stock of health to decrease, as the opportunity cost of capital increases. However, if the MEC curve is inelastic, gross investment grows over time. Thus the model predicts older people to have more sick time, to consume more medical care and devote more time to investment
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TL;DR: This paper found that personal experience with public health insurance programs exerts a causal influence on attitudes toward both Medicare and the Affordable Care Act, and that the effects of personal experience, unlike attempts to shape attitudes through elite political messaging, are concentrated among low-information voters who might otherwise not be attuned to the political environment.
Abstract: Using a regression discontinuity design, we show that personal experience with public health insurance programs exerts a causal influence on attitudes toward both Medicare and the Affordable Care Act. However, we argue that the conditional dynamics of these policy feedback effects differ from standard models of opinion formation and change. Specifically, we find that personal experience can shape preferences among those whose partisanship might otherwise make them resistant to elite messaging; in the case of support for health policy, we find effects of public programs are most pronounced among Republicans. In addition, we find that the effects of personal experience, unlike attempts to shape attitudes through elite political messaging, are concentrated among low-information voters who might otherwise not be attuned to the political environment.
79 citations
TL;DR: It is found that both mental and physical health are moderately state-dependent and cross-effects suggest that health policies aimed at specific aspects of health should consider potential spill-over effects.
Abstract: Mental and physical aspects are both integral to health but little is known about the dynamic relationship between them. We consider the dynamic relationship between mental and physical health using a sample of 11,203 individuals in six waves (2002-2013) of the English Longitudinal Study of Ageing (ELSA). We estimate conditional linear and non-linear random-effects regression models to identify the effects of past physical health, measured by Activities of Daily Living (ADL), and past mental health, measured by the Centre for Epidemiological Studies Depression (CES-D) scale, on both present physical and mental health. We find that both mental and physical health are moderately state-dependent. Better past mental health increases present physical health significantly. Better past physical health has a larger effect on present mental health. Past mental health has stronger effects on present physical health than physical activity or education. It explains 2.0% of the unobserved heterogeneity in physical health. Past physical health has stronger effects on present mental health than health investments, income or education. It explains 0.4% of the unobserved heterogeneity in mental health. These cross-effects suggest that health policies aimed at specific aspects of health should consider potential spill-over effects.
71 citations
TL;DR: New evidence is presented on the effects of job quality on the occurrence of severe acute conditions, the level of cardiovascular risk factors, musculoskeletal disorders, mental health, functional disabilities and self-assessed health among workers aged 50+.
Abstract: Using data from the Survey of Health, Ageing and Retirement in Europe, this study presents new evidence on the effects of job quality on the occurrence of severe acute conditions, the level of cardiovascular risk factors, musculoskeletal disorders, mental health, functional disabilities and self-assessed health among workers aged 50+. By combining intrinsic job quality with job insecurity and pay the study maps out multiple potential pathways through which work may affect health and well-being. Levering longitudinal data and external information on early retirement ages allows for accounting of unobserved heterogeneity, selection bias and reverse causality. The empirical findings suggest that inequities in health correlate with inequities in job quality, though a substantial fraction of these associations reflect time-constant unobserved heterogeneity. Still, there is evidence for genuine protective effects of better jobs on musculoskeletal disorders, mental health and general health. The effect could contribute to a substantial number of avoidable disorders among older workers, despite relatively modest effect sizes at the level of individuals. Mental health, in particular, responds to changes in job quality. Selection bias such as the healthy worker effect does not alter the results. But the influence of job quality on health may be transitional among older workers. An in-depth analysis of health dynamics reveals no evidence for persistence.
39 citations
Cites background from "The Dynamics of Health"
...Health is also highly persistent over the lifecycle [32, 33]....
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TL;DR: An age at which average health deficits converge for men and women and across countries is suggested, similar to the compensation effect of mortality, which may be associated with human life span.
Abstract: We analyze human aging—understood as health deficit accumulation—for a panel of European individuals, using four waves of the Survey of Health, Aging and Retirement in Europe (SHARE data set) and constructing a health deficit index. Results from log-linear regressions suggest that, on average, elderly European men and women develop approximately 2.5 % more health deficits from one birthday to the next. In nonlinear regressions (akin to the Gompertz-Makeham model), however, we find much greater rates of aging and large differences between men and women as well as between countries. Interestingly, these differences follow a particular regularity (akin to the compensation effect of mortality) and suggest an age at which average health deficits converge for men and women and across countries. This age, which may be associated with human life span, is estimated as 102 ± 2.6 years.
38 citations
Cites methods from "The Dynamics of Health"
...To test whether the results are biased due to not considering the people that died across the waves, we performed the variable addition tests, as suggested by Verbeek and Nijman (1992) and also employed by Contoyannis et al (2004)....
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16 Oct 2015
TL;DR: This paper focused on the self-reported responses given to survey questions of the form “Overall, how would you rate your health?” with typical response items being on a scale ranging from poor to excellent.
Abstract: This paper focuses on the self-reported responses given to survey questions of the form “Overall, how would you rate your health?” with typical response items being on a scale ranging from poor to excellent. Usually, the overwhelming majority of responses fall in either the middle category or the one immediately to the “right” of this (for example, good and very good). However, based on a wide range of other medical indicators, such favorable responses appear to paint an overly rosy picture of true health. The hypothesis here is that these “middle” responses have been, in some sense, inflated. That is, for whatever reason, a significant number of responders inaccurately report into these categories. Our results do indeed suggest that such inflation is present in these categories. Adjusted responses to these questions could lead to significant changes in policy, and should be reflected upon when analyzing and interpreting these scales.
36 citations
References
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TL;DR: A model of the demand for the commodity "good health" is constructed and it is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education if more educated people are more efficient producers of health.
Abstract: The aim of this study is to construct a model of the demand for the commodity "good health." The central proposition of the model is that health can be viewed as a durable capital stock that produces an output of healthy time. It is assumed that individuals inherit an initial stock of health that depreciates with age and can be increased by investment. In this framework, the "shadow price" of health depends on many other variables besides the price of medical care. It is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education if more educated people are more efficient producers of health. Of particular importance is the conclusion that, under certain conditions, an increase in the shadow price may simultaneously reduce the quantity of health demanded and increase the quantity of medical care demanded.
4,532 citations
TL;DR: In this paper, a simple approach to handling the initial conditions problem in dynamic, nonlinear unobserved effects models is proposed, where instead of attempting to obtain the joint distribution of all outcomes of the endogenous variables, instead, the distribution is conditional on the initial value (and the observed history of strictly exogenous explanatory variables).
Abstract: I study a simple, widely applicable approach to handling the initial conditions problem in dynamic, nonlinear unobserved effects models. Rather than attempting to obtain the joint distribution of all outcomes of the endogenous variables, I propose finding the distribution conditional on the initial value (and the observed history of strictly exogenous explanatory variables). The approach is flexible, and results in simple estimation strategies for at least three leading dynamic, nonlinear models: probit, Tobit and Poisson regression. I treat the general problem of estimating average partial effects, and show that simple estimators exist for important special cases. Copyright © 2005 John Wiley & Sons, Ltd.
1,613 citations
TL;DR: The authors found that children from lower income households with chronic conditions have worse health than do those from higher income households, and that adverse health effects of lower income accumulate over children's lives.
Abstract: The well-known positive association between health and income in adulthood has antecedents in childhood. Not only is children’s health positively related to household income, but the relationship between household income and children's health becomes more pronounced as children age. Part of the relationship can be explained by the arrival and impact of chronic conditions. Children from lower income households with chronic conditions have worse health than do those from higher-income households. The adverse health effects of lower income accumulate over children’s lives. Part of the intergenerational transmission of socioeconomic status may work through the impact of parents' income on children’s health.
1,333 citations
Posted Content•
TL;DR: In this article, the authors explore the connection between income inequality and health in both poor and rich countries and conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places.
Abstract: I explore the connection between income inequality and health in both poor and rich countries. I discuss a range of mechanisms, including nonlinear income effects, credit restrictions, nutritional traps, public goods provision, and relative deprivation. I review the evidence on the effects of income inequality on the rate of decline of mortality over time, on geographical pattens of mortality, and on individual-level mortality. Much of the literature needs to be treated skeptically, if only because of the low quality of much of the data on income inequality. Although there are many puzzles that remain, I conclude that there is no direct link from income inequality to ill-health; individuals are no more likely to die if they live in more unequal places. The raw correlations that are sometimes found are likely the result of factors other than income inequality, some of which are intimately linked to broader notions of inequality and unfairness. That income inequality itself is not a health risk does not deny the importance for health of other inequalities, nor of the social environment. Whether income redistribution can improve population health does not depend on a direct effect of income inequality and remains an open question.
1,240 citations
Additional excerpts
...many societies and periods (see e.g. Smith, 1999, Deaton, 2003 )....
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TL;DR: In this article, a detailed treatment of the human capital model of the demand for health which was originally developed in 1972 is discussed, and theoretical extensions of the model are reviewed, as well as empirical research that tests the predictions and studies causality between years of formal schooling completed and good health is surveyed.
Abstract: This chapter contains a detailed treatment of the human capital model of the demand for health which was originally developed in 1972. Theoretical predictions are discussed, and theoretical extensions of the model are reviewed. Empirical research that tests the predictions of the model or studies causality between years of formal schooling completed and good health is surveyed. The model views health as a durable capital stock that yields an output of healthy time. Individuals inherit an initial amount of this stock that depreciates with age and can be increased by investment. The household production function model of consumer behavior is employed to account for the gap between health as an output and medical care as one of many inputs into its production. In this framework the “shadow price” of health depends on many variables besides the price of medical care. It is shown that the shadow price rises with age if the rate of depreciation on the stock of health rises over the life cycle and falls with education (years of formal schooling completed) if more educated people are more efficient producers of health. An important result is that, under certain conditions, an increase in the shadow price may simultaneously reduce the quantity of health demanded and increase the quantities of health inputs demanded.
971 citations
"The Dynamics of Health" refers background in this paper
...Another major issue in the demand for health literature concerns the impact of schooling on health (see Grossman, 2000 )....
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...depend on how uncertainty influences earnings (see Grossman, 2000 )....
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