Specification of the health production function and its behavioral implications

Abstract

The health production function of the canonical health-capital model is generalized to allow the state of health to affect the total and marginal products of health investment. If the total and marginal products of health investment are nonincreasing functions of the state of health, then the solution of the generalized model is locally qualitatively identical to that of the canonical model. Moreover, and in contrast to the canonical model, the generalized model is able to rationalize the cycling of the state of health and health investment observed in some individuals. The necessary conditions on the health production function for cyclical behavior are identified as well.