Health Investment Choice Under The Framework Of Life Cycle Theory

Health human capital is one of an important form of human capital. Health is not only the important support for the realization of individual value, it is also an important means of promoting economic development. Through the history of economic development, health human capital has played an important role. Countries which health human capital is scarce often have the slow process of capital accumulation and difficult economic development. While countries which have rapid economic take-off are often in public health and disease control. Therefore, the existing theory and model have affirmed the role in promoting the healthy of human capital on economic growth.However, vigorously develop the health human capital is bound to reduce the other human capital such as education capital or other options such as consumption, savings caused by "crowding out effect". For the micro perspective of individual labourers, in the premise of the realization of the whole life cycle of individual utility maximization, how health investment to choose the optimal choice is one of the focus of attention in this paper; for a macro perspective of national policy, how government policy between social welfare, education human capital and health human capital balance, make the total social welfare maximized is the second question we focus on.Therefore, this paper firstly is basen on mortality endogenous individual choice model, and study workers how to achieve optimal in the entire life cycle. We found that, the individual’s optimal design is related to the selection and social policy and government system. If one country has more adverse health environment, it will lead to lower individual choice of health investment, resulting in decreasing overall economic welfare. In addition, the original model we have found that in countries with relatively high population growth rate, the individual will also choose the low health investment.Then, based on the original model of our mortality endogenous, we add social security parameters, to study different government financial arrangements will affect the optimal choice of healthy individuals. We set up two scenarios: perfectly competitive capital market and capital market is not fully competitive. First of all, the complete competition in the capital market conditions, the conclusion and the Ricardo equivalence theorem adopt full funded social security system is consistent, namely the government regardless of whether the government can change the tax rate, people can borrow from savings to adjust the value of how many total savings, therefore, completely accumulation model can’t affect individual optimal health investment decision. While in the PAYG system, increase government tax rate will cause a decrease in personal health investment, thereby reducing the total social welfare.Then, we relax the perfectly competitive capital market conditions, we found that in the complete accumulation increase government tax rate might resulted in the decrease of young period of after tax income, but unable to advance consumption, but will increase the investment of health of individual choice, lead to a rise in long-term income increased, mortality decreased and the welfare level. In a PAYGO system, the government tax rate increase in the overall impact on the economy is uncertain, long-term social income may rise or fall.Finally, in the human capital model, we mainly tried to study the government revenue for the optimal decision of social welfare, education or health investment. We also assume that two scenarios-- loose social security system and strict social security system. In a relaxed under the social security system, can launch the government’s revenue is mainly used for social welfare or education, will promote the social welfare increase; while the government taxes for health investment is too high, can only be balanced with lower income. In strictly under the social security system, the conclusion of roughly the same, but the premise condition is slightly different.In the empirical part, two aspects we also from the micro perspective and macro perspective to validate the decision and education level, health healthy weigh two aspects respectively, thus construct the health level of the micro and macro perspectives decision equation and human capital balance equation. By using the micro China nutrition and health data of CHNS1991~2011 macro micro data, we use the OECD representative countries and Chinese data validation. We found that, from the microscopic point of view, the current China health investment is obviously insufficient, and rural public health investment is inadequate; from a macro perspective, the health investment has inverted U curve, but China currently still in the inverted U shape curve rising stage, still need to health human capital investment.