The Demand for Health

A Theoretical and Empirical Investigation

Michael Grossman

Columbia University Press

The Demand for Health

Pub Date: August 2017

ISBN: 9780231179010

216 Pages

Format: Paperback

List Price: $20.00£16.99

Pub Date: August 2017

ISBN: 9780231179003

216 Pages

Format: Hardcover

List Price: $60.00£50.00

Pub Date: August 2017

ISBN: 9780231544528

216 Pages

Format: E-book

List Price: $19.99£16.99

The Demand for Health

A Theoretical and Empirical Investigation

Michael Grossman

Columbia University Press

A seminal work in health economics first published in 1972, Michael Grossman's The Demand for Health introduced a new theoretical model for determining the health status of the population. His work uniquely synthesized economic and public health knowledge and has catalyzed a vastly influential body of health economics literature. It is well past time to bring this important work back into print.

Grossman bases his approach on Gary S. Becker's household production function model and his theory of investment in human capital. Consumers demand health, which can include illness-free days in a given year or life expectancy, and then produce it through the input of medical care services, diet, other market goods and services, and time. Grossman also treats health and knowledge as equal parts of the durable stock of human capital. Consumers therefore have an incentive to invest in health to increase their earnings in the future. From here, Grossman examines complementarities between health capital and other forms of human capital, the most important of which is knowledge capital earned through schooling and its effect on the efficiency of production. He concludes that the rate of return on investing in health by increasing education may exceed the rate of return on investing in health through greater medical care. Higher income may not lead to better health outcomes, as wealth enables the consumption of goods and services with adverse health effects. These are some of the major revelations of Grossman's model, findings that have great relevance as we struggle to understand the links between poverty, education, structural disadvantages, and health.
A most remarkable study, which ranks among the very most important and pioneering ones in health economics. Gary S. Becker
A seminal work in health economics, which led to a major stream of literature dealing with the determinants of the health status of the population. Joseph Newhouse, Harvard University
Grossman’s The Demand for Health did for health economics what Gary Becker’s Human Capital did for labor economics by describing the broad, integrative power of human capital theory. Robert Michael, University of Chicago
The Demand for Health revolutionized economists’ theorizing about health. Arleen A. Leibowitz, University of California, Los Angeles
The Demand for Health quickly had a major impact on health economics and has continued to inspire streams of research ever since. Victor Fuchs, Stanford University
A pathbreaking work on the demand for health, the production of health, and health capital. John Mullahy, University of Wisconsin
An elegant study in the tradition of Becker, using micro-economic methods to explore an area of non firm capital formation, and then ingeniously exploiting survey data to test some interesting theoretical propositions. J. D. Pole, Journal of the Royal Statistical Society
A ground breaking work which has produced a model that is theoretically sound, intuitively appealing, and yields significantly testable implications. Ronald Anderson, The Journal of Economic Literature
Grossman’s theoretical model, which is a major innovation, treats the demand for health (and the derived demand for medical care) as determined in the context of a life-cycle model of human capital investment. David Salkever, American Journal of Agricultural Economics
Essential. T. E. Getzen, iHEA and Temple University, Choice
List of Tables
Foreword to the 2017 Edition
Foreword to the 1972 Edition
Acknowledgments
Introduction and Summary
1. A Stock Approach to the Demand for Health
2. The Shadow Price of Health
3. The Pure Consumption Model
4. An Empirical Formulation of the Model
5. Empirical Results: The Norc Sample
6. Joint Production and the Mortality Data
Appendix A. Utility Maximizations
Appendix B. Derivation of Investment Model Formulas
Appendix C. Derivation of Consumption Model Formulas
Appendix D. Statistical Properties of the Model
Appendix E. Additional Empirical Results
Appendix F. Sources and Methods: Mortality Analysis
Notes
Index

About the Author

Michael Grossman is Distinguished Professor of Economics at the City University of New York Graduate Center, Health Economics Program Director at the National Bureau of Economic Research, and Research Fellow at IZA. He is the inaugural recipient of the American Society of Health Economists' award for lifetime contributions to the field of health economics. He is also the author of Determinants of Health: An Economic Perspective (Columbia, 2017).