Non-monotonic health behaviours - implications for individual health-related behaviour in a demand-for-health...

A number of behaviours influence health in a non-monotonic way. Physical activity and alcohol consumption, for instance, may be beneficial to one's health in moderate but detrimental in large quantities. We develop a demand-for-health framework that incorporates the feature of a physiologically optimal level. An individual may still choose a physiologically non-optimal level, because of the trade-off in his or her preferences for health versus other utility-affecting commodities. However, any deviation above or below the physiologically optimal level will be punished with respect to health. Distinguishing between two individual types we study (a) the qualitative properties of optimal time-paths of health capital and health-related behaviour, (b) the perturbations of the optimal time-paths that result from changes in exogenous parameters, and (c) steady state properties. Predictions of the model and the implications for empirical analysis are discussed at length. Some comments on potential future extensions conclude the paper.