Table 1.
Parameter Values for the Calibrated Simulations
| Parameter | Description | Value |
|---|---|---|
| Parameters taken from the literature | ||
| α | Effectiveness of health investment | 0.75 |
| r | Interest rate | 0.03 |
| β | Time preference rate | 0.03 |
| γ | Power law relation sick time and health | 1.7 |
| ρ | Coefficient of relative risk aversion | 3 |
| ζ | Utility share of consumption vs health | 0.7 |
| μC | Efficiency of consumption | 1 |
| pm | Price of medical care | 1 |
| pc | Price of consumption | 1 |
| A0, AT | Assets | 0 |
| Calibrated parameters | ||
| μI | Efficiency of health investment | 0.25 |
| μU | Scale parameter utility | 0.00001 |
| ν | Dependency of depreciation on health | 0.3 |
| a | Deterioration rate intercept | −3.6 |
| b | Deterioration rate slope | 1/17 ≈ 0.059 |
| T | Length of life | 76.8 |