The demand for health: an empirical reformulation of the Grossman model

Deprivation as a fundamental cause of morbidity and reduced life expectancy: an observational study using German statutory health insurance data

Across all developed countries, there is a steep life expectancy gradient with respect to deprivation. This paper provides a theoretical underpinning for this gradient in line with the Grossman model, indicating that deprivation affects morbidity and, consequently, life expectancy in three ways: directly from deprivation to morbidity, and indirectly through lower income and a trade-off between investments in health and social status. Using rich German claims data covering 6.3 million insured people over four years, this paper illustrates that deprivation increases morbidity and reduces life expectancy. It was estimated that highly deprived individuals had approximately two more chronic diseases and a life expectancy reduced by 15 years compared to the least deprived individuals. This mechanism of deprivation is identified as fundamental, as deprived people remain trapped in their social status, and this status results in health investment decisions that affect long-term morbidity. However, in the German setting, the income and investment paths of the effects of deprivation were of minor relevance due to the broad national coverage of its SHI system. The most important aspects of deprivation were direct effects on morbidity, which accumulate over the lifespan. In this respect, personal aspects, such as social status, were found to be three times more important than spatial aspects, such as area deprivation.

The influence of parents' and partner's education on own health behaviours

The link between educational attainment and multiple health behaviours has been explained in various ways. This paper provides new insights into the social patterning in health behaviours by investigating the influence of parents' and partners' educational attainments on a composite indicator that integrates the four commonly studied lifestyle behaviours (smoking, alcohol, physical activity and BMI). Two key outcome indicators of interests were created to reflect both ends of the "healthy - unhealthy spectrum". Data was drawn from The Tromsø Study, conducted in 2015/16 (N = 21,083, aged 40-93 years). We controlled for two indicators of early life human capital and one personality trait variable. Partners' education attainments are relatively more important for avoiding unhealthy behaviour than choosing healthy behaviour; on the contrary, parents' education is more important for healthy behaviour. Heterogeneity by sex and age was also evident. The influences of partner's education on widening the socioeconomic contrasts in health behaviours were much stronger in the younger (40-59 years) age group. In conclusion, our results support the hypothesis that own health behaviour is affected by the educational attainments of our 'nearest and dearest' (i.e. spouse, mother, and father), net of own education. This study facilitates a better understanding of education-health behaviours nexus from a life course perspective and supports the importance of family-based interventions to improve healthy behaviours.

Where Are Populations Aging Better? A Global Comparison of Healthy Aging Across Organization for Economic Cooperation and Development Countries

OBJECTIVES

Global comparisons and large samples are needed to inform policy makers about aging trends among people aged older than 60 years. Using harmonized data gathered from the Gateway to Global Aging data, we introduce a new framework to measure healthy aging across 13 OECD countries.

METHODS

First, we developed an original measure of physiological age (PA), that is, a measure of age weighted for the influence of frailty, activities of daily living limitations, and comorbidities. Second, we compared healthy aging measures across 13 countries based on a ranking of the countries according to the discrepancy between estimated PA and chronological age (CA). Third, we explored the socioeconomic factors associated with healthy aging.

RESULTS

We found a strong correlation between our PA measure and biological age. Italy, Israel, and the United States are the 3 countries where PA is the highest (independent of CA), thus indicating aging in poor health. In contrast, Switzerland, The Netherlands, Greece, Sweden, and Denmark have much lower PA than CA, thus indicating healthy aging. Finally, the PA-CA discrepancy is higher among poorer, less educated, and single older individuals.

CONCLUSIONS

Countries with higher PA need to implement or reinforce healthy aging measures and target the disadvantaged populations.

The demand for health turns 50: Reflections

The year 2022 is the 50th anniversary of the publication of my demand for health model in "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy 80(2): 223-255, and in The Demands for Health: A Theoretical and Empirical Investigation, NBER Occasional Paper 119 New York: Columbia University Press for the NBER. To mark that occasion, this editorial focuses on the history of the model and its impacts on the field of health economics.

QALY losses for chronic diseases and its social distribution in the general population: results from the Belgian Health Interview Survey

Background

The burden of chronic diseases is rapidly rising, both in terms of morbidity and mortality. This burden is disproportionally carried by socially disadvantaged population subgroups. Quality-adjusted life years (QALYs) measure the impact of disease on mortality and morbidity into a single index. This study aims to estimate the burden of chronic diseases in terms of QALY losses and to model its social distribution for the general population.

Methods

The Belgian Health Interview Survey 2013 and 2018 provided data on self-reported chronic conditions for a nationally representative sample. The annual QALY loss per 100,000 individuals was calculated for each condition, incorporating disease prevalence and health-related quality of life (HRQoL) data (EQ-5D-5L). Socioeconomic inequalities, based on respondents’ socioeconomic status (SES), were assessed by estimating population attributable fractions (PAF).

Results

For both years, the largest QALY losses were observed in dorsopathies, arthropathies, hypertension/high cholesterol, and genitourinary problems. QALY losses were larger in women and in older individuals. Individuals with high SES had consistently lower QALY loss when facing a chronic disease compared to those with low SES. In both years, a higher PAF was found in individuals with hip fracture and stroke. In 2013, the health inequality gap amounts to 33,731 QALYs and further expanded to 42,273 QALYs in 2018.

Conclusion

Given that chronic diseases will rise in the next decades, addressing its burden is necessary, particularly among the most vulnerable (i.e. older persons, women, low SES). Interventions in these target groups should get priority in order to reduce the burden of chronic diseases.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12889-022-13675-y.

Predicting key drivers for health care expenditure growth in the Middle East region: a Grossman-PLS modeling approach

BACKGROUND

Numerous studies have provided evidence to the literature on the demand side of the determinants of health-care expenditure by employing the Grossman model. However, understanding the supply side of the determinants of health-care expenditure will be of crucial importance for improving health outcomes.

METHODS

This study has used panel data for 15 Middle-East region countries for the time period of 2000-2016 Initially, Grossman's model of the demand for care is estimated. Furthermore, a Parallel model of the supply of care is estimated for contradistinction analysis. Finally, an integrated partial least square structural equation model is being developed.

RESULTS

Results show that the relative wage rate and aging variables are the only indicators that are statistically significant with theoretically consistent signs as postulated by Grossman's theoretical model. The opposite is true with schooling and the proxy of the medical care relative prices. However, in the parallel model, all the four drivers of the demand for care are statistically significant determinants of health-care spending.

CONCLUSIONS

Therefore, expansion of health insurance coverage particularly for the elderly cohort of the population could be a promising mechanism to boost the demand for care and eventually improve health outcomes.

Health Demand: Empirical Study of Effective Urban Households Demand in Indonesia

BACKGROUND: Grossman's health demand model recognizes medical price as a determinant of the estimation model. This article aims to examine the role of medical expenses in health demand by utilizing the number of sick and disturbed days obtained from Susenas, a survey on the expenditure of household food and non-food consumption conducted by the Central Bureau of Statistics to measure health demand and health insurance as a medical price in a reduction model. Health insurance can replace medical expenses because those who have health insurance face relatively low medical costs and face lower medical prices than those without health insurance.   METHODS: Using the Ordinary Least Squares (OLS) estimation technique, sebuah teknik estimasi model regresi for 6,642 households this was obtained through three stages: First, using 71,932 sample households of susenas that relied fully on the Susenas sampling method by BPS; Second, find households that have experienced health problems during the last 6 months; Third, find households that have health expenditures of 24,341. Furthermore, the estimation model is based on 6,642 households identified to be in urban areas using the Ordinary Least Squares (OLS) estimation method.   FINDINGS: The health demand estimation model that can be used to determine the behavior of health demand among urban households is limited to households with formal primary school (SD) education levels. Taking advantage of certain wages, age, cigarette expenditure, and sports expenses, it was found that the number of sick days and felt disturbed in the household group that had health insurance was 5.68 days relatively greater than those without health insurance. However, expanding to higher education and older age was found to be 1.47 days and 1.57 days. Aging tends to decrease good health and health insurance tends to increase it.   CONCLUSION: It was found that health stocks differed between insured households and households without health insurance in those with aging.

Are long-term care jobs harmful? Evidence from Germany

Like many OECD countries, Germany is currently facing a shortage of long-term care (LTC) workers. This situation is concerning in the context of the ageing of the German population. A potential reason why Germany fails to recruit and retain LTC workers is that LTC jobs are particularly demanding (physical and psychological strain) which may be harmful to health. However, there is a lack of empirical evidence demonstrating this effect. This article fills the gap in the literature by exploring to what extent LTC jobs reduce workers' health over time. We estimate a dynamic panel data model on the German Socio-Economic Panel (v.35; 1984-2018), which allows adressing selection issues into occupations. Our paper provides innovative findings on the impact of LTC occupations on workers' health. We confirm that LTC jobs have a negative impact on self-reported health. Our results have strong policy implications: we emphasize the need to provide sufficient assistance to LTC workers, who are at risk of facing more health issues than other workers. This issue is key to increase the attractiveness of LTC jobs and reduce turnover in the LTC workforce.

A Dynamic Analysis of the Demand for Health Care in Post-Apartheid South Africa

The study aimed to investigate the drivers of demand for healthcare in South Africa 26 years after democracy. The pattern healthcare demand by households in South Africa is that most households use public healthcare services particularly public clinics compared to private and traditional healthcare facilities. Using conditional probability models, the logit model to be more specific, the results revealed that households head who is unemployed, households who do not have a business, households who were not receiving pension money, had a greater probability of demand for public healthcare institutions. On the other hand, being male, being White, Indian and Coloured, being a property owner and being not a grant beneficiary, reduces the probability of demand for public healthcare facilities in South Africa. As a result, the study recommends more investment in public healthcare but more in public clinics in South Africa due to the high percentage of households using these services. Also, the government must consider investing more in the maintenance and improvement of the welfare of nurses in the country considering the huge role they play in the delivery of healthcare to the citizens.

Testing the Grossman model of medical spending determinants with macroeconomic panel data

Michael Grossman's human capital model of the demand for health has been argued to be one of the major achievements in theoretical health economics. Attempts to test this model empirically have been sparse, however, and with mixed results. These attempts so far relied on using-mostly cross-sectional-micro data from household surveys. For the first time in the literature, we bring in macroeconomic panel data for 29 OECD countries over the period 1970-2010 to test the model. To check the robustness of the results for the determinants of medical spending identified by the model, we include additional covariates in an extreme bounds analysis (EBA) framework. The preferred model specifications (including the robust covariates) do not lend much empirical support to the Grossman model. This is in line with the mixed results of earlier studies.

A Dynamic Estimation of Obesity Using Nhanes Data: A Pseudo-Panel Approach

In this analysis, we examine the effect of wages on obesity by constructing pseudo-panels to conduct a dynamic estimation of Grossman's human capital model. The results indicate that wages have an increasing effect on obesity status. After accounting for past health status, the protective effect of wages commonly disseminated in the literature reverses on obesity status. The results may also indicate possible asymmetric consumption behavior between foods/nutrients that improve diet quality versus those that degrade it. Individuals may be more keen to adhere to prophylactic diet strategies that abate consumption of unhealthy food/nutrients rather than measures which increase healthy nutrient consumption. Additionally, wages have an increasing effect on overall total calories consumed. These findings suggest that higher wage earners may focus their diet efforts on reducing consumption of specific nutrients but compensate by overconsuming other types of nutrients increasing overall calorie intake. Copyright © 2017 John Wiley & Sons, Ltd.

Drug therapy adherence and health outcomes in the presence of physician and patient unobserved heterogeneity

Understanding the role that drug adherence has on health outcomes in everyday clinical practice is central for the policy maker. This is particularly true when patients suffer from asymptomatic chronic conditions (e.g., hypertension, hypercholesterolaemia, and diabetes). By exploiting a unique longitudinal dataset at patient and physician level in Italy, we show that patients and physicians unobserved characteristics play an important role in determining health status, at least as important as drug adherence. Most importantly, we find that both adherence and prescribed treatment regimen effects are highly heterogeneous across physicians, highlighting their crucial role in shaping patients' health status.

Out-of-pocket expenditures for pharmaceuticals: lessons from the Austrian household budget survey

BACKGROUND

Paying pharmaceuticals out of pocket is an important source of financing pharmaceutical consumption. Only limited empirical knowledge is available on the determinants of these expenditures.

OBJECTIVES

In this article we analyze which characteristics of private households influence out-of-pocket pharmaceutical expenditure (OOPPE) in Austria.

DESIGN AND METHODS

We use cross-sectional information on OOPPE and household characteristics provided by the Austrian household budget survey 2009/10. We split pharmaceutical expenditures into the two components prescription fees and over-the-counter (OTC) expenditures. To adjust for the specific characteristics of the data, we compare different econometric approaches: a two-part model, hurdle model, generalized linear model and zero-inflated negative binomial regression model.

FINDINGS

The finally selected econometric approaches give a quite consistent picture. The probability of expenditures of both types is strongly influenced by the household structure. It increases with age, doctoral visits and the presence of a female householder. The education level and income only increase the probability of OTC pharmaceuticals. The level of OTC expenditures remains widely unexplained while the household structure and age influence the expenditures for prescription fees. Insurance characteristics of private households, either private or public, play a minor role in explaining the expenditure levels in all specifications. This refers to a homogeneous and comprehensive provision of pharmaceuticals in the public part of the Austrian health care system.

CONCLUSIONS

The article gives useful insights into the determinants of pharmaceutical expenditures of private households and supplements the previous research that focuses on the individual level.

Out-of-pocket expenditure by private households for dental services - empirical evidence from Austria

AIMS

Dental services differ from other health services in several dimensions. One important difference is that a substantial share of costs of dental services-especially costs beyond routine dental treatment-is paid directly by the patient out-of-pocket.

SETTINGS AND DESIGN

This study analyses the socio-economic determinants of out-of-pocket expenditure for dental services (OOPE) in Austria at the household level.

METHODS AND MATERIAL

Cross-sectional information on OOPE and household characteristics provided by the Austrian household budget survey 2009/10 was analysed.

STATISTICAL ANALYSIS USED

A two-part model (Logit/GLM) and one-part GLM was applied.

RESULTS

The probability of OOPE is strongly affected by the life cycle (structure) of the household. It is higher for higher age classes, higher income, and partially higher levels of education. The type of public insurance has an influence on expenditure probability while the existence of private health insurance has no significant effect. In contrast to the highly statistically significant coefficients in the first stage, the covariates of the second stage remain predominantly insignificant. According to the results, the level of expenditure is driven mainly by the level of education and income. The results of the one-part GLM confirm the results of the two-part model.

CONCLUSIONS

The results allow new insights into the determinants of OOPE for dental care. The household level turns out to be an adequate basis to study the determinants of OOPE, although caution should be applied before jumping to conclusions for the individual level.

The significance of overweight and obesity for individual health behaviour: An economic analysis based on the Swedish surveys of living conditions 1980—81, 1988—89, and 1996—97

Aims: The aim of the study was to examine whether being overweight (25≤BMI<30) or obese (BMI≥30) affect subsequent individual health behaviour, applying the framework of the individual-as-producer-of-health model. Methods: A set of panel data for 3,693 individuals interviewed repeatedly in 1980—81, 1988—89, and 1996—97 was created from the Swedish population-based biannual survey of living conditions. Self-assessed health was chosen as indicator of individual health capital and physical exercise as indicator of individual health investment. Results: (a) Men and women who suffered from obesity invested significantly less in their health in terms of physical exercise and reported significantly lower self-assessed health than the general male and female population, respectively. (b) Men who suffered from overweight invested less in their health and reported significantly lower self-assessed health than the general population, whereas women who were overweight — but not obese — did not differ from the general population. (c) Men and women who went from being obese to being overweight reported self-assessed health levels that did not differ from the general male and female population, respectively, but exercised less than men and women in general. Conclusions: The results imply (a) that the individual weight history must be taken into account in studies of the effect of obesity and overweight on health and health-related behaviour and (b) that men and women differ concerning the impact of obesity and overweight on health and health investments.

The effect of relationship status on health with dynamic health and persistent relationships

The dynamic evolution of health and persistent relationship status pose econometric challenges to disentangling the causal effect of relationships on health from the selection effect of health on relationship choice. Using a new econometric strategy we find that marriage is not universally better for health. Rather, cohabitation benefits the health of men and women over 45, being never married is no worse for health, and only divorce marginally harms the health of younger men. We find strong evidence that unobservable health-related factors can confound estimates. Our method can be applied to other research questions with dynamic dependent and multivariate endogenous variables.

Are health shocks different? Evidence from a multishock survey in Laos

Using primary data from Laos, we compare a broad range of different types of shocks in terms of their incidence, distribution between the poor and the better off, idiosyncrasy, costs, coping responses, and self-reported impacts on well-being. Health shocks are more common than most other shocks, more concentrated among the poor, more idiosyncratic, more costly, trigger more coping strategies, and highly likely to lead to a cut in consumption. Household members experiencing a health shock lost, on average, 0.6 point on a five-point health scale; the wealthier are better able to limit the health impacts of a health shock.

Health Inequalities through the Lens of Health Capital Theory: Issues, Solutions, and Future Directions

We explore what health-capital theory has to offer in terms of informing and directing research into health inequality. We argue that economic theory can help in identifying mechanisms through which specific socioeconomic indicators and health interact. Our reading of the literature, and our own work, leads us to conclude that non-degenerate versions of the Grossman model (1972a;b) and its extensions can explain many salient stylized facts on health inequalities. Yet, further development is required in at least two directions. First, a childhood phase needs to be incorporated, in recognition of the importance of childhood endowments and investments in the determination of later-life socioeconomic and health outcomes. Second, a unified theory of joint investment in skill (or human) capital and in health capital could provide a basis for a theory of the relationship between education and health.

The dynamics of medical care use in the British household panel survey

We explore whether medical care use is persistent over a long panel using 18 waves of the British Household Panel Survey. Of particular interest is high medical care use because a few high users account for a disproportionate amount of use while many individuals use no medical care in a given year. If health is a primary driver of medical care demand, and we control for health, then past medical care use should be uninformative for future use. However, we find that conditional on health, other covariates and unobservable heterogeneity, medical care use remains significantly persistent. "No use" and "high use" are more strongly persistent, and persistence is generally stronger for women, those in poor health, and at older ages. We find that unobservable heterogeneity explains between 10% and 25% of the variation in medical care use. This heterogeneity is significantly correlated with both medical care use and health over our long panel. These findings have implications for the econometric modeling of medical care demand and suggest that policies aimed to reduce aggregate medical care spending by improving health, particularly the health of seniors, may be less effective than projected using static models.

The Grossman model after 40 years

This editorial presents a critical review of the health model pioneered by Michael Grossman (MGM) in 1972 [8]. It argues that whereas the MGM has great charm for economists, it fails to achieve acceptance by interested laypersons and policy makers. The main reasons for this failure are: (1) the assumption of a long and fixed planning horizon, (2) a fixed ratio between individuals healthcare expenditure and the cost of their own health-enhancing efforts regardless of their state of health, and (3) their presumed ability to restore the state of health deemed optimal at a speed that does not depend on their state of health. An alternative formulation emphasizing the stochastic nature of health production is sketched that conceptually provides solutions to these three problems. In addition, it permits discarding a popular medical argument that seems to undermine the very basis of welfare analysis applied to health by claiming preferences to be unstable: "As long as you are healthy, you don't give a damn, but as soon as you are sick, you are prepared to sacrifice everything to restore your health." The editorial concludes by outlining a research program that may help health economists break away from their MGM fixation.

Is there empirical evidence for decreasing returns to scale in a health capital model?

We estimate a health investment equation, derived from a health capital model that is an extension of the well-known Grossman model. Of particular interest is whether the health production function has constant returns to scale, as in the standard Grossman model, or decreasing returns to scale, as in the Ehrlich-Chuma model and extensions thereof. The model with decreasing returns to scale has a number of theoretically and empirically desirable characteristics that the constant returns model does not have. Although our empirical equation does not point-identify the decreasing returns to scale curvature parameter, it does allow us to test for constant versus decreasing returns to scale. The results are suggestive of decreasing returns and in line with prior estimates from the literature. But when we attempt to control for the endogeneity of health by using instrumental variables, the results become inconclusive. This brings into question the robustness of prior estimates in this literature.

Theoretical shortcomings of the Grossman model

This article contains a review of the seminal Grossman model from a perspective of assumptions and simplifications, which were necessary to make the model tractable. The Grossman model emphasises health as a fundamental commodity, which implies that the demand for healthcare is a derived demand; in the model, individuals are both consumers and producers of health. The model predicts that an individual would invest in health until the marginal benefit of health equals its marginal cost; this equilibrium demand for health entails that the length of an individual's life would be determined endogenously. This review also discusses the model's refinements and extensions that have relaxed some of the constraints of the original model. In spite of its shortcomings, the Grossman model remains — even after 40 years — one of the few models in the realm of health economics, which attempts to conceptualise the complex demand for health and healthcare both theoretically and empirically.

Grossman's missing health threshold

We present a generalized solution to Grossman's model of health capital (1972), relaxing the widely used assumption that individuals can adjust their health stock instantaneously to an "optimal" level without adjustment costs. The Grossman model then predicts the existence of a health threshold above which individuals do not demand medical care. Our generalized solution addresses a significant criticism: the model's prediction that health and medical care are positively related is consistently rejected by the data. We suggest structural- and reduced-form equations to test our generalized solution and contrast the predictions of the model with the empirical literature.

Health inputs and cumulative health deficits among the older Chinese

Using a health economics framework, we examined how both individual level investments at different life stages and current community-level environmental factors affect individual health stock and flows at old ages. We used a nationwide dataset from the 2002 and 2005 waves of the Chinese Longitudinal Healthy Longevity Survey, which included more than 15,000 adults aged 65 and older from 22 provinces in mainland China. We measured health stock with a cumulative health deficit index, a measure developed in geriatrics and gerontology that reflects deficits, illnesses, and functional impairment in numerous domains of health. The cumulative health deficit index has not been used in health economics before, but is a significant contribution because it captures the health stock concept very well and overcomes the problems of inconsistency resulting from the use of different measures of health stock in research. Our results show that several proxy measures for individual health investments in both childhood (nutritional status and parental survival status) and adulthood (family financial condition and access to healthcare) yielded positive returns to health stock measured by the cumulative health deficit index. Investments in social connections and healthy behaviors (religious involvement, alcohol use, and exercise) also produced positive returns in health stock. Current community-level factors such as air quality and labor force participation rate were significantly associated with levels of health deficits in old age as well. Yet, most of these individual investment and community environment variables did not significantly affect short-term health flows (improvement or deterioration in health status over three years). Our findings have important implications for developing preventive health programs in the context of population aging by focusing on policy-relevant predictors and a comprehensive indicator of health status in later life.

The Association Between Individual Time Preferences and Health Maintenance Habits

Context. Encouraging healthy behaviors, including disease screening, exercise, and tobacco avoidance, has been a significant focus of clinical attention in recent decades. Little is known about the association between individual preferences with respect to time play and preventive health care use and healthy lifestyles. Objective. To determine whether rates of these health behaviors are associated with latent time preferences. Design. Interval regression analysis was used to impute individual level discount rates. The difference in means for the rates of health behaviors were assessed for high vs. low to moderate discounting groups using one-factor probit models. Participants. The 2004 wave of the Health and Retirement Survey included in a time preferences module (1,039 respondents aged 24 to 65 years). Main Outcome Measures. Rates of recent mammograms, breast exams, Pap smears, prostate exams, cholesterol testing, flu shots, and dental visits, and non-smoking status. Results. Respondents in the upper 20th percentile of the distribution have an average imputed annual discount rate of 0.335 (33.5%). High discount rate status is found to have a negative marginal association on the probability that respondents had recent mammogram use (—15.1%; P = 0.001), Pap smear use (—8.3%; P = 0.049), prostate examination use (—20.4%; P =0.003), dental visits (—24.8%; P = 0.001), cholesterol testing (—12.4%; P = 0.001), flu shot usage (—11.1%; P = 0.005), rates of vigorous exercise (—15.1%; P = 0.001), nonsmoking status (—10.4%; P= 0.001), and undertook all measured health habits (—7%; P = 0.001). Conclusions. Differences in underlying preferences for the present over the future may be a substantial barrier for people’s propensity to adopt healthy lifestyles.

The effect of income growth and inequality on health inequality: Theory and empirical evidence from the European Panel

Governments of EU countries have declared that they would like to couple income growth with reductions in social inequalities in income and health. We show that, theoretically, both aims can be reconciled only under very specific conditions concerning the type of growth and the income responsiveness of health. We investigate whether these conditions were met in Europe in the 1990s using panel data from the European Community Household Panel. We demonstrate that (i) in most countries, the income elasticity of health was positive and increases with income, and (ii) that income growth was not pro-rich in most EU countries, resulting in small or negligible reductions in income inequality. The combination of both findings explains the modest increases we observe in income-related health inequality in the majority of countries.

Health among long-term survivors of breast cancer-an analysis of 5-year survivors based on the Swedish surveys of living conditions 1979-1995 and the Swedish Cancer Registry 2000

In this paper we examine health among breast cancer 5-year survivors. We raise two questions: (1) how do the health level of this survival group compare to the health level of the general population; and (2) how have the health levels among these survivors changed over time. We found that 5-year breast cancer survivors assess their health lower than the general population, and that having being diagnosed in a later year increases health compared to having received the diagnosis at an earlier point in time. This implies that screening and treatment of breast cancer have been successful. Further, we did not find any statistically significant effect of the length of the time spell since diagnosis on health. One reason for this may be that those additional individuals surviving over time as a result of improved treatment therapies have on average lower health levels than those who survived before more efficient medical technologies were introduced.

Investments in social capital--implications of social interactions for the production of health

This paper develops a theoretical model of the family as producer of health- and social capital. There are both direct and indirect returns on the production and accumulation of health- and social capital. Direct returns (the consumption motives) result since health and social capital both enhance individual welfare per se. Indirect returns (the investment motives) result since health capital increases the amount of productive time, and social capital improves the efficiency of the production technology used for producing health capital. The main prediction of the theoretical model is that the amount of social capital is positively related to the level of health; individuals with high levels of social capital are healthier than individuals with lower levels of social capital, ceteris paribus. An empirical model is estimated, using a set of individual panel data from three different time periods in Sweden. We find that social capital is positively related to the level of health capital, which supports the theoretical model. Further, we find that the level of social capital (1) declines with age, (2) is lower for those married or cohabiting, and (3) is lower for men than for women.

Understanding variation in chronic disease outcomes

We propose an explanation for variation in disease outcomes based on patient adaptation to the conditions of chronic disease. We develop a model of patient adaptation using the example of Type 2 diabetes mellitus and assumptions about the process entailed in transforming self-care behaviors of compliance with treatment, compliance with glucose monitoring, and patient's knowledge seeking behavior into health outcomes of glycemic control and patient satisfaction. Using data from 609 adults with diagnosed Type 2 diabetes we develop an efficiency (fitness) frontier in order to identify best practice (maximally adapted) patients and forms (archetypes) of patient inefficiency. Outcomes of frontier patients are partitioned by categories of returns to scale. Outcomes for off-frontier patients are associated with disease severity and patient archetype. The model implicates strategies for improved health outcomes based on fitness and self-care behaviors.

On the empirical association between poor health and low socioeconomic status at old age

Epidemiologic studies using mortality rates as indicators of health fail to find any meaningful association between poor health and low socioeconomic status in older age-groups, whereas economic studies using self-assessed health consistently find a significant positive correlation, even after controlling for self-reporting errors. Such contradictory results have not been reported for working age individuals. A simple explanation might be that the elderly samples on which the epidemiologic and economic studies are based come from different populations. However, this paper shows that similar contradictory results are obtained even when the same samples are used, simply by switching between self-assessed health and mortality as health indicators. An alternative explanation is proposed, namely that these health indicators yield different results because they relate to different ranges of the latent health variable at old age.

Asthma and allergy: the significance of chronic conditions for individual health behaviour

BACKGROUND

In health economics, health is regarded as part of an individual's human capital. As such it depreciates over time, and investments in health are made in order to keep the stock of health capital at the desired level. Using this framework for analysis of health-related behaviour and Swedish panel data, we examined whether the presence of asthma or allergy affects perceived health and investments in health.

METHODS

A set of panel data for approximately 3800 individuals interviewed repeatedly in 1980/81, 1988/89, and 1996/97 was created from the Swedish biannual survey of living conditions. Self-assessed health was chosen as the indicator of health capital and the reported number of sick days as the indicator of health investment. The presence of asthma or allergy, age, wage rate, wealth, marital status, number of children, exercise and smoking habits, gender, and geographic location of household were all chosen as explanatory variables. An ordered probit model was estimated for the health equation and a Poisson model for the investment equation.

RESULTS

We found that both asthmatics and those who suffer from allergy invested more in their health than the general population. We also found that asthmatics reported significantly lower self-assessed health than the general population, while those who suffered from allergy did not differ significantly from the general population regarding their self-assessed health.

CONCLUSION

The human capital approach was found suitable for studying the impact of asthma and allergy on individual health behaviour. Health policy measures, which reduce the individual's costs of investing in his or her health, would improve health levels. Because asthmatics were found less healthy than those suffering from allergy, the potential gains would be larger for patients with asthma than for patients with allergy. The issue of whether this would be a cost-effective policy or not would require a different design and, hence, could not be solved within the present study.

New estimates of the demand for health: results based on a categorical health measure and Swedish micro data

In this paper we estimate a "Grossman" model of demand for health based on Swedish micro data. The data set consists of a random sample of over 5000 individuals taken from the Swedish adult population. Health capital is measured by a categorical measure of overall health status, and an ordered probit model is used to econometrically estimate the demand for health equation. The results are consistent with the theoretical predictions and show that the demand for health increases with income and education and decreases with age, male gender, overweight, living in big cities and being single.

An economic and sociological interpretation of social differences in health-related behaviour: an encounter as a guide to social epidemiology

We argue that the group-centred analyses of social epidemiology should follow from theoretical considerations that take the situation of the individual as their natural starting point. In a tentative dialogue between economics and sociology, we develop a framework for the analysis of health-related behaviour. Such behaviour is modelled as a process of decision-making at the individual level. Within economics, we draw specifically on the demand-for-health literature and the new institutional economics. Within sociology, Bourdieu's habitus theory is presented in combination with a macro-structural approach where the focus is on the process of individualization. The relationship between these different approaches to health-related behaviour and their implications is discussed. We find that the encounter between different sciences provides valuable insights for future work in the socio-epidemiological tradition.

Health, health care, and the environment. Econometric evidence from German micro data

The paper develops and applies a Grossman-style health production model set up in discrete time to explain the impact of environmental pollution on the demand for both health and health care. In order to introduce the environment, our analysis takes changes in environmental conditions to influence the rate at which an individual's stock of health depreciates. While the theoretical part of our paper also contains a discussion of the full model, we restrict our empirical analysis to a submodel which is known as the pure investment model. This is because the other submodel, the pure consumption model, implies a rather implausible case of satiation with respect to the individual's preferences. Our empirical findings are based on data taken from the German Socio-economic Panel. The stock of health capital and environmental pollution are treated as latent variables and estimated using a Linear Covariance Structures model. The quality of the environment turns out to be an important determinant of health capital. From the point of view of health economics, improvements in environmental conditions can be interpreted as preventive measures. In terms of prevention, public policies designed to protect the environment also yield significant health effects. As regards health care demand the influence is not clearcut, i.e., one cannot necessarily expect a reduction in resource use.

Preferences for outcomes in economic evaluation: an economic approach to addressing economic problems

In this paper we critically appraise the appropriateness and validity from an economic perspective of alternative preference-based approaches to measuring outcomes in economic evaluations of health care interventions. We describe the properties of an outcome measure for economic evaluation to make it compatible with the principles of economics when applied to the problem of resource allocation. We also describe the difference and similarities between the psychometric and the economic approaches for the measurement of outcome. Using these properties we critically appraise the use of QALY and HYE methods of measuring individual and social preferences for health outcome. We argue that the most advanced measure currently available that meets these required properties is the HYE. Because the HYE, unlike the QALY, has its foundations in utility theory under uncertainty, it neither assumes particular formulations of the individual utility function, nor is it incompatible with the principles of economics. As such it represents a further stage in the continuing development of methods for economic evaluation of health care programmes.