Extending the Grossman model: the association between societal apprehension and investments in health capital

Sammanfattning: The Grossman model is a widely used theoretical framework in the field of health economics. However, it has been criticized on the basis of its assumptions being difficult to apply outside of theory. Consequently, several attempts have been made at extending and improving the model. In this thesis, we propose yet another extension in an effort to increase the applicability of the framework. The extension is motivated from empirical observations in the medical field suggesting that an increase in the degree of apprehension on an individual level increases healthcare-seeking. This essay investigates whether apprehension on a societal level may influence investments in health capital-a crucial part of the Grossman model. We use emergency department attendance as a proxy for investments in health capital, and two indices representing societal apprehension are created based on the quantity of apprehension-reflecting vocabulary used in news media and social media respectively. Controlling for previously known emergency department attendance determinants, we find that societal apprehension significantly influences the amount of daily patient visits. On average, we find that the daily healthcare-seeking behavior of 23 and 8 persons can be explained by an average daily change of societal apprehension, as measured by the two indices respectively. We conclude that societal apprehension significantly affects a person's tendency to invest in health capital through a change of the perceived cost of capital and/or a shift in the MEI-curve, and as such constitutes a reasonable extension of the Grossman model.