Abstract
In the health economics literature, the demand for health and market health inputs is dominated by adaptations of Grossman's health capital model. The model has been widely used to explore a wide range of issues related to health, socioeconomic inequalities in health, demand for medical care, health preventions, occupational choice, and retirement decisions. The commodity of health is viewed as a durable capital stock that yields a flow of healthy time or illness-free time, that depreciates with age, and that can be augmented with the help of market health inputs and own time. The purpose of this article is to provide a comprehensive critical review of the model. Underlying Grossman's model are a faulty conceptual framework and assumptions that tend to exaggerate the degree of control consumers/patients may have over their state of health and survival. The assumption of full information about one's state of health and the efficacy of various health inputs abstracts away from the problems posed by the agency relationship under uncertainty and informational asymmetry. Grossman's individualistic and mechanistic view of health strips health capital and its production of much of their biological/physiological content and their interactions with the individual's social and physical environment.
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