Question

In the Grossman model both education and medical care are used as inputs into an individual’s health production function. Using math (such as an example production function) and written words: demonstrate the differences in the Grossman model between how education and medical care act as inputs into health.

Answer 1

The grossman model was extremely influential in the development of health economics. The model of human capital regarding the health demand was developed in the year 1972 by Michael grossman.this model perceives health being a capital stock which is durable and also yields and output from a healthy time. Health can be described as a function which includes biological factors along with income social status working conditions education culture gender lifestyle and many more. Demand for health is a bit more complicated then product demand. Demand for health is derived demand.the amount of health which is demanded is at times measured by quantity of services used which includes in patient days visits of outpatient and prescriptions. Gossman define that health is both a consumption and production good.reasons stated by him include health is directly consumed people are more happy when they are healthy. Also health is also an investment. Good health allows people to do better things. Hence individuals access consumer as well as producer of health.the idea introduced his human capital like health and education is invested for improving the outcomes in walking market for non working households. Ultimate goal is to increase the earnings.