Adding Grossbard to Grossman: A Model of Demand for Health with Household Production and Marriage Markets

Shoshana Amyra Grossbard

Lorena Hakak

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Abstract: According to the Grossman model the demand for health-related goods or services such as medical care varies with the cost of their substitutes produced in the household. This paper contributes to the literature on the demand for health-related products by simultaneously considering substitution between household-produced items and commercial health-related products and substitution between goods produced at home by oneself and by one’s spouse or partner. New variables that can help explain demand for medical care and other health products are identified, including sex ratios in marriage markets and exogeneous parameters that influence sex ratios such as gender differences in mortality and incarceration. It is argued that laws about marriage or divorce may affect demand for health-related inputs and health outcomes such as good health or good nutrition. We examine how demand for health-related inputs may vary according to many traits of men and women who may marry each other and produce goods on each other’s behalf. New insights are gained regarding the determinants of the price elasticity of demand for health-related goods such as medical services.

Published: January, 2022