ABSTRACT
Michael Grossman has most prominently explored the idea of "health" as an economic good, and showed how a rational economic person would have a demand curve for medical services that "derived" from the underlying demand for health itself. The ideas flowing from the simple concept of a stock of health permeate modern health economics. A normal healthy baby has a relatively high stock of health. An infant born prematurely, with lung disease, the risk of brain damage, and possible blindness, has a very low initial stock of health. Health outcomes depend on the disease a person has, as does the productivity of medical care. For some diseases, modern medicine has highly effective therapies, and for others, not so effective. The chapter shows production functions for three different disease processes. The production process contains much more than "medical care," including, most prominently, people own lifestyle.
