Unit 2 Flashcards
(30 cards)
what is the health capital model
how individuals allocate resources to produce health
what is the health production function
mathematical relation of the process of transforming health inputs into health
what is the health production function equation
H = f(health inputs, health state, Xb, Xg)
what are the three reasons people desire good health
provide direct benefits and allows us to undertake activities that provide utility; allows us to work more days, earn more money, therefore increase our levels of consumption; and enables us to live longer
how does health relate to consumption demand
it provides benefits from our consumption demand
how does health relate to our investment demand
it provides benefits from our investment demand
what is health modelled as
a type of human capital
what are the two problems in utility maximization
production problem, and consumption problem
what are the investment assumptions of health
individuals want to maximize their lifetime utility; consumers have perfect knowledge; ability to allocate time between different activities
in the Grossman Model, what are the assumptions
individuals:
- allocate time between work and leisure
- spend leisure time on health and non health activities
- spend earned income on health and non health commodities
- produce health capital that may help in future years
- all in the pursuit of an optimal level of health
how does education affect efficiency
education increases the efficiency with which one can produce health
how does age affect health
age reduces the rate at which an individual can produce health
how does capital stock affect health stock
individuals’ may deplete their health stock in order to replenish other capital stock
what is the invisible hand
the regard for our own self-interest
what are the five characteristics of health care
demand for health care, externalities, information asymmetry, uncertainty, and vulnerability to the integrity of a person
what is externalities
a benefit incurred by a party who didn’t agree to the action causing the benefit
what are physical externalities
a selfish externality, even a purely selfish person cares about others’ consumption of health care
what is a caring externality
a concern for others’ welfare
what does marginal benefit equal
marginal cost
explain the uncertainty characteristic of health care
price consumer faces does not equal cost to society
how does a licensure address information asymmetry
protects uninformed consumers
how does the patient-physician relationship address information asymmetry
physician has a professional obligation to act as an agent for the patient
what is the realistic version of a perfect agency relationship
the patient is there to give the doctor all the information the doctor needs in order to make a decision, and then the patient should then implement that decision once doctor has made it
list some of the demands for health care
out of pocket price
income
time costs
state of health
quality of care
