ABSTRACT
This chapter introduces an analysis of obesity with its implications regarding human capital. Grossman uses the theory of human capital to explain the demand for health and health care. Obesity provides many insights in a model of health capital. Consumers apply sets of health inputs, which might include not only market inputs of health care, but also diet, exercise, and time, to their physical makeup, thus making investments in health capital. The Grossman model describes how consumers simultaneously make choices over many periods or years. Conventional economic analysis provides a powerful conceptual apparatus by which to analyze the demand for a capital good. Gerdtham Ulf-G and M. Johannesson estimates health demand with a Swedish sample of over 5,000 adults. They use a categorical measure of overall health status to measure health capital. From a health investment point of view, obesity is a bad investment, leading to higher medical expenditures, and lower earnings.
