Journal of Applied Economic Research
ISSN 2712-7435
Empirical Testing of Grossman’s the Demand for Health Model: The Case of Russia
Olga N. Volkova 1,
Aleksandra N. Volkova 2
1 National Research University Higher School of Economics, Saint-Petersburg, Russia
2 National Research University Higher School of Economics, Moscow, Russia
Abstract
Healthcare services constitute one of the most important markets as they are used by all people regardless of age, wealth, and worldview. In order to effectively manage both private and public healthcare systems and to expand the scope of services provided in a timely manner, it is necessary to understand the nature of the demand for health, depending on the development of society and individuals. This paper is devoted to the empirical testing of one of the most influential models of health economics – Michael Grossman’s model of health demand – by means of econometrical modelling. We used data from RLMS HSE (Russia Longitudinal Monitoring Survey of HSE) for 2019 and 2020. The paper tested the hypotheses that educational level positively affects the demand for health, that women invest in their health more responsibly than men, that the “age”- “demand for health” link has non-linear character, and the rate of health amortization is not constant during the life of an individual. We concluded that health demonstrates the features of both consumption and investment good. It was also found that income affects the demand for health just within the consumption interpretation of this construct, not within the investment one. The study showed that people with a low income tend to consume medical services more actively by spending more time in hospitals. It can be assumed that demand for medical services will increase during the economic crisis, job cuts, inflation, and a drop in real incomes of the population. The results of the study may help to predict the demand and consumption of medical services and to facilitate decision-making in Russia's healthcare system in the future.
Keywords
Grossman’s model; demand for health; health economics; Russia; healthcare system; RLMS HSE.
JEL classification
I15References
1. Grossman, M. (1972). On the Concept of Health Capital and the Demand for Health. Journal of Political Economy, Vol. 80, No. 2, 223–255. https://doi.org/10.1086/259880
2. Grossman, M. (1982). The demand for health after a decade. Journal of Health Economics, Vol. 1, Issue 1, 1–3. https://doi.org/10.1016/0167-6296(82)90018-2
3. Grossman, M. (2000). The Human Capital Model. In: Handbook of Health Economics. Edited by A.J. Culyer, J.P. Newhouse. Vol. 1, Part A. Elsevier, 347–408. https://doi.org/10.1016/S1574-0064(00)80166-3
4. Grossman, M. (2010). The Relationship between Health and Schooling. In: Investing in Human Capital for Economic Development in China. Edited by G.G. Liu, S. Zhang, Z. Zhang. World Scientific, 279–291. https://doi.org/10.1142/9789812814425_0016
5. Grossman, M. (2022). The demand for health turns 50: Reflections. Health Economics, Vol. 31, Issue 9, 1807–1822. https://doi.org/10.1002/hec.4563
6. Gould, N., Gould, E. (2001). Health as a consumption object: Research notes and preliminary investigation. International Journal of Consumer Studies, Vol. 25, Issue 2, 90–101. https://doi.org/10.1046/j.1470-6431.2001.00184.x
7. Kenkel, D.S. (1994). The demand for preventive medical care. Applied Economics, Vol. 26, Issue 4, 313–325. https://doi.org/10.1080/00036849400000078
8. Muurinen, J.-M. (1982). Demand for health: A generalised Grossman model. Journal of Health Economics, Vol. 1, Issue 1, 5–28. https://doi.org/10.1016/0167-6296(82)90019-4
9. Bloom, D., Canning, D. (2003). Health as Human Capital and its Impact on Economic Performance. The Geneva Papers on Risk and Insurance. Issues and Practice, Vol. 28, No. 2, 304–315. http://dx.doi.org/10.1111/1468-0440.00225
10. Cropper, M.L. (1977). Health, investment in health, and occupational choice. Journal of Political Economy, Vol. 85, No. 6, 1273–1294. http://dx.doi.org/10.1086/260637
11. Becker, G.S. (2007). Health as Human Capital: Synthesis and Extensions. Oxford Economic Papers, Vol. 59, Issue 3, 379–410. https://doi.org/10.1093/oep/gpm020
12. Galama T.J., van Kippersluis H. (2015). A Theory of Education and Health. RAND Working Paper Series WR-1094, 79 p. http://dx.doi.org/10.2139/ssrn.2798899
13. Schneider-Kamp, A. (2021). Health capital: toward a conceptual framework for understanding the construction of individual health. Social Theory & Health, Vol. 19, 205–219. https://doi.org/10.1057/s41285-020-00145-x
14. Weil, D.N. (2014). Health and Economic Growth. In: Handbook of Economic Growth. Edited by P. Aghion, S.N. Durlauf. Vol. 2. Elsevier, 623–682. https://doi.org/10.1016/B978-0-444-53540-5.00003-3
15. Sultana, T., Dey, S.R., Tareque, M. (2022). Exploring the linkage between human capital and economic growth: A look at 141 developing and developed countries. Economic Systems, Vol. 46, Issue 3, 101017. https://doi.org/10.1016/j.ecosys.2022.101017
16. Wagstaff, A. (2002). Poverty and health sector inequalities. Bulletin of the World Health Organization, Vol. 80, Issue 2, 97–105. http://dx.doi.org/10.1590/S0042-96862002000200004
17. Glied S, Lleras-Muney, A. (2003). Health Inequality, Education and Medical Innovation. NBER Working Paper No. w9738. National Bureau of Economic Research, 58 p. Available at: https://ssrn.com/abstract=414741
18. Azarnert, L.A. (2020). Health capital provision and human capital accumulation. Oxford Economic Papers, Vol. 72, Issue 3, 633–650. https://doi.org/10.1093/oep/gpaa004
19. Oster, E., Shoulson, I., Ray Dorsey, E. (2013). Limited Life Expectancy, Human Capital and Health Investments. American Economic Review, Vol. 103, No. 5, 1977–2002. https://doi.org/10.1257/aer.103.5.1977
20. Dassen, F.C.M., Houben, K., Jansen, A. (2015). Time orientation and eating behavior: Unhealthy eaters consider immediate consequences, while healthy eaters focus on future health. Appetite, Vol. 91, 13–19. https://doi.org/10.1016/j.appet.2015.03.020
21. Brunello, G., Fort, M., Schneeweis, N., Winter-Ebmer, R. (2016). The Causal Effect of Education on Health: What is the Role of Health Behaviors? Health Economics, Vol. 25, Issue 3, 314–336. https://doi.org/10.1002/hec.3141
22. Zajacova, A., Lawrence, E.M. (2018). The Relationship Between Education and Health: Reducing Disparities Through a Contextual Approach. Annual Review of Public Health, Vol. 39, 273–289. https://doi.org/10.1146/annurev-publhealth-031816-044628
23. Fletcher, J.M., Frisvold, D.E. (2009). Higher Education and Health Investments: Does More Schooling Affect Preventive Health Care Use? Journal of Human Capital, Vol. 3, No. 2, 144–176. https://doi.org/10.1086/645090
24. Goldman, D.P., Smith, J.P. (2002). Can patient self-management help explain the SES health gradient? Proceedings of the National Academy of Sciences, Vol. 99, Issue 16, 10929–10934. https://doi.org/10.1073/pnas.162086599
25. Spandorfer, J.M., Karras, D.J., Hughes, L.A., Caputo, C. (1995) Comprehension of discharge instructions by patients in an urban emergency department. Annals of Emergency Medicine, Vol. 25, Issue 1, 71–74. https://doi.org/10.1016/S0196-0644(95)70358-6
26. Mazumder, B. (2008). Does Education Improve Health? A Reexamination of the Evidence from Compulsory Schooling Laws. Economic Perspectives, Vol. 32, No. 2, 2–16. http://dx.doi.org/10.2139/ssrn.1714136
27. Cutler, D.M, Lleras-Muney, A. (2010). Understanding differences in health behaviors by education. Journal of Health Economics, Vol. 29, Issue 1, 1–28. https://doi.org/10.1016/j.jhealeco.2009.10.003
28. Kari, J.T., Viinikainen, J., Böckerman, P., et al. (2020). Education leads to a more physically active lifestyle: Evidence based on Mendelian randomization. Scandinavian Journal of Medicine & Science in Sports, Vol. 30, Issue 7, 1194–1204. https://doi.org/10.1111/sms.13653
29. Leibowitz, A.A. (2004). The demand for health and health concerns after 30 years. Journal of Health Economics, Vol. 23, Issue 4, 663–671. https://doi.org/10.1016/j.jhealeco.2004.04.005
30. Feldstein, P.J. (1966). Research on the Demand for Health Services. The Milbank Memorial Fund Quarterly, Vol. 44, No. 3, 128–165. https://doi.org/10.2307/3348968
31. Zajacova, A., Siddiqi, A. (2022). A comparison of health and socioeconomic gradients in health between the United States and Canada. Social Science & Medicine, Vol. 306, 115099. https://doi.org/10.1016/j.socscimed.2022.115099
32. Dunga, S.H. (2019). Analysis of the Demand for Private Healthcare in South Africa. Studia Universitatis Babes-Bolyai Oeconomica, Vol. 64, Issue 1, 59–70. https://doi.org/10.2478/subboec-2019-0005
33. Babitsch, B., Gohl, D., von Lengerke, T. (2012). Re-revisiting Andersen's Behavioral Model of Health Services Use: a systematic review of studies from 1998-2011. GMS Psycho-Social-Medicine, Vol. 9, 11. https://doi.org/10.3205/psm000089
34. Jones, A.M., Rice, N., Contoyannis, P. (2012). The Dynamics of Health. In: The Elgar Companion to Health Economics. Edited by A.M. Jones. Edward Elgar Publishing, 15–23. https://doi.org/10.4337/9780857938138.00011
35. Gerdtham, U.G., Johannesson, M. (1999). New estimates of the demand for health: results based on a categorical health measure and Swedish micro data. Social Science & Medicine, Vol. 49, Issue 10, 1325–1332. https://doi.org/10.1016/s0277-9536(99)00206-3
36. Hartwig, J., Sturm, J.E. (2018). Testing the Grossman model of medical spending determinants with macroeconomic panel data. The European Journal of Health Economics, Vol. 19, Issue 8, 1067–1086. https://doi.org/10.1007/s10198-018-0958-2
37. Wagstaff, A. (1993). The demand for health: An empirical reformulation of the Grossman model. Health Economics, Vol. 2, Issue 2, 189–198. https://doi.org/10.1002/hec.4730020211
38. Zweifel, P. (2012). The Grossman model after 40 years. The European Journal of Health Economics, Vol. 13, Issue 6, 677–682. https://doi.org/10.1007/s10198-012-0420-9
39. Ponzo, M., Scoppa, V. (2021). Does demand for health services depend on cost-sharing? Evidence from Italy. Economic Modelling, Vol. 103, 105599. https://doi.org/10.1016/j.econmod.2021.105599
40. Burggraf, C., Glauben, T., Grecksch, W. (2016). New impacts of Grossman’s health investment model and the Russian demand for medical care. Journal of Public Health, Vol. 24, 41–56. https://doi.org/10.1007/s10389-015-0692-5
41. Zazdravnykh, E.A., Aistov, A.V., Aleksandrova, E.A. (2021). Total expenditure elasticity of healthcare spending in Russia. Russian Journal of Economics, Vol. 7, Issue 4, 326–353. https://doi.org/10.32609/j.ruje.7.76219
42. Hosseini Shokouh, S.M., Arab, M., Emamgholipour, S., Rashidian, A., Montazeri, A., Zaboli, R. (2017). Conceptual Models of Social Determinants of Health: A Narrative Review. Iranian Journal of Public Health, Vol. 46, Issue 4, 435–446. Available at: https://pubmed.ncbi.nlm.nih.gov/28540259/
43. Fuchs, V.R. (2004). Reflections on the socio-economic correlates of health. Journal of Health Economics, Vol. 23, Issue 4, 653–661. https://doi.org/10.1016/j.jhealeco.2004.04.004
44. Erbsland, M., Ried, W., Ulrich, V. (1995). Health, health care, and the environment. Econometric evidence from German micro data. Health Economics, Vol. 4, Issue 3, 169–182. https://doi.org/10.1002/hec.4730040303
45. Zhao, Z. (2008). Health demand and health determinants in China. Journal of Chinese Economic and Business Studies, Vol. 6, Issue 1, 77–98. https://doi.org/10.1080/14765280701841573
46. Wagstaff, A. (1986). The demand for health: Some new empirical evidence. Journal of Health Economics, Vol. 5, Issue 3, 195–233. https://doi.org/10.1016/0167-6296(86)90015-9
Acknowledgements
Authors thank E.A. Zazdravnykh for bringing this topic to our attention. We are also grateful to anonymous reviewers for helpful comments on an earlier version.
About Authors
Olga Nikolaevna Volkova
Candidate of Physical and Mathematical Sciences, Professor, Department of Finance, Saint-Petersburg School of Economics and Management, National Research University Higher School of Economics, Saint-Petersburg, Russia (194100, Saint-Petersburg, Kantemirovskaya street, 3); ORCID https://orcid.org/0000-0002-7188-3395 e-mail: ovolkova@hse.ru
Aleksandra Nikolaevna Volkova
Bachelor of Economics, Master Student, Graduate School of Business, National Research University Higher School of Economics, Moscow, Russia (119049, Moscow, Shabolovka street, 26, Building, 1); ORCID https://orcid.org/0009-0005-8548-399X e-mail: volkova2001@rambler.ru
For citation
Volkova, O.N., Volkova, A.N. (2024). Empirical Testing of Grossman’s the Demand for Health Model: The Case of Russia. Journal of Applied Economic Research, Vol. 23, No. 1, 33-58. https://doi.org/10.15826/vestnik.2024.23.1.002
Article info
Received July 28, 2023; Revised December 1, 2023; Accepted December 15, 2023.
DOI: https://doi.org/10.15826/vestnik.2024.23.1.002
Download full text article:
~589 KB, *.pdf
(Uploaded
10.03.2024)
Created / Updated: 2 September 2015 / 20 September 2021
© Federal State Autonomous Educational Institution of Higher Education «Ural Federal University named after the first President of Russia B.N.Yeltsin»
Remarks?
select the text and press:
Ctrl + Enter
Portal design: Artsofte
Contact us
Rector's Office
Rector, Dr. Victor Koksharov
Tel. +7 (343) 375-45-03, e-mail: rector@urfu.ru
Vice-Rector for International Relations, Dr. Maxim Khomyakov
Tel. +7 (343) 375-46-27, e-mail: Maksim.Khomyakov@urfu.ru