Abstract
Simulations of a model of healthy and unhealthy consumption are used to investigate the impact of various terminal conditions on life-span, pathways of health-related consumption and health. A model in which life-span and the 'death' stock of health are fixed is compared to versions in which (i) the 'death' stock of health is freely chosen; (ii) life-span is freely chosen; (iii) both the 'death' stock of health and life-span are freely chosen. The choice of terminal conditions has a striking impact on optimal plans. Results are discussed with reference to the existing demand for health literature and illustrate the application of iterative processes to determine optimal life-span, the role played by the marginal value of health capital in determining optimal plans, and the importance of checking the second-order conditions for the optimal choice of life-span. (C) 2001 Elsevier Science B.V. All rights reserved.
| Original language | English |
|---|---|
| Pages (from-to) | 613-638 |
| Number of pages | 26 |
| Journal | Journal of Health Economics |
| Volume | 20 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Jul 2001 |
Keywords
- the demand for health
- optimal life-span
- healthy and unhealthy consumption
- terminal and transversality conditions
- DEMAND
- LIFE