The Grossman model of health demand is a model for studying the
demand for health and medical care outlined by Michael Grossman in
a monograph in 1972 entitled: The demand for health: A theoretical
and empirical investigation.It is assumed that individuals inherit
an initial stock of health that depreciates with age and can be
increased by investment.
The Grossman model was extended in a number of directions. Among
the first to include uncertainty in the model were Charles Phelps
and Maureen Cropper.The relationship between education and health
was expanded in the model by Isaac Ehrlich.Regarding the
relationship between education and medical care demand, one
important question is whether the marginal efficiency of capital
elasticity with respect to education is less than or greater than
one. If the curve is elastic (elasticity greater than one),
education will increase medical care demand. On the other hand, if
the curve is inelastic, education will decrease medical care
demand.Jan Acton expanded the time constraint by including travel
and waiting time in health care.
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