Health and Its Effect on the Household Nonmarket Production and Consumption
El-Mofty, Samar Mohamed Fathi
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https://hdl.handle.net/2142/70742
Description
Title
Health and Its Effect on the Household Nonmarket Production and Consumption
Author(s)
El-Mofty, Samar Mohamed Fathi
Issue Date
1983
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, General
Abstract
The main objectives of the study are: (a) to survey critically the progress that has been made by current research in measuring the monetary and non-monetary returns to investment in health; and (b) to develop a conceptual framework for measuring empirically the effect of non-monetary returns on the consumption and production behaviors of households.
The theoretical model employs the concept of household production function. The household is viewed as a small multiproduct firm in which members' nonmarket time is combined with purchased market goods and services to produce commodities (z(,j)'s). The household consumes all its own production of these commodities and thereby derives its utility.
Three hypotheses are derived from the model: (1) the efficiency effect hypothesis suggests that households substitute away market goods and services and toward nonmarket time due to an increase in human efficiency; (2) the substitution effect hypothesis suggests that households substitute away nonmarket time and toward market goods and services due to an increase in the value of a unit of time; and (3) the expenditure (income) effect hypothesis suggests that as health capital increases, the productivity per unit of market time increases. Therefore, smaller amounts of market time are needed to finance the current level of expenditures. As a result, more time may be available for market production and thus more income for the household to spend.
The empirical analysis was done using a sample from the Bureau of Labor Statistics (BLS) Expenditure Survey of 1973. The primary empirical work involved multiple regression analysis for estimating Engel curves for various expenditure items of market goods and services.
There is enough evidence in this study to support the notion that health capital does influence the consumption patterns of the households through the change in the input ratio of the household production function. Hence, investment in health has both monetary and non-monetary returns that variably influence the consumption and the production behaviors of households.
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