Estimating the Impact of Medication on Diabetics' Diet and Lifestyle Choices



Maximizing utility subject to the income constraint and to the health production function can be
written in standard form as
max
U(B,H(B,M;n),C )

s.t. PBB +PMM + CI .

Thus the Lagrangian for this optimization problem can be written as follows:

L = U(B, H(B,M; η), C) + λ(I - PbB - PmM - C).

Where I is income, PB and PM are the prices for behaviors and medication, and for simplicity,
the price of all other goods, C, is defined as the numeraire. The first order conditions are
1
a) L = U + U H P = 0
B B HB B
1b) LM =UHHMPM =0
1
c) LC =UC -λ=0
1
d) Lλ=I-PBB-PMM-C=0.

Solving 1a and 1b for λ and equating (or for UC through 1c) exhausts the budget constraint 1d
and yields:

U +U H P
ɔʌ B____H B _ B

7 UH ~P'
HM   M

That is, the marginal rate of substitution between behaviors and pharmaceuticals that offset the
health cost of behaviors is equal to the price ratio. The marginal utility of behaviors is a net
concept as it includes the direct benefits as well as the health cost.

Equation (2) can be rewritten as

P

F UhHmm-(Ub + UhHb ) = 0.
HM    B HB

PB



More intriguing information

1. Policy Formulation, Implementation and Feedback in EU Merger Control
2. The name is absent
3. Consciousness, cognition, and the hierarchy of context: extending the global neuronal workspace model
4. Washington Irving and the Knickerbocker Group
5. The name is absent
6. The mental map of Dutch entrepreneurs. Changes in the subjective rating of locations in the Netherlands, 1983-1993-2003
7. The name is absent
8. Better policy analysis with better data. Constructing a Social Accounting Matrix from the European System of National Accounts.
9. Making International Human Rights Protection More Effective: A Rational-Choice Approach to the Effectiveness of Ius Standi Provisions
10. Work Rich, Time Poor? Time-Use of Women and Men in Ireland
11. Reform of the EU Sugar Regime: Impacts on Sugar Production in Ireland
12. AN IMPROVED 2D OPTICAL FLOW SENSOR FOR MOTION SEGMENTATION
13. THE UNCERTAIN FUTURE OF THE MEXICAN MARKET FOR U.S. COTTON: IMPACT OF THE ELIMINATION OF TEXTILE AND CLOTHING QUOTAS
14. fMRI Investigation of Cortical and Subcortical Networks in the Learning of Abstract and Effector-Specific Representations of Motor Sequences
15. The name is absent
16. The name is absent
17. Sex differences in the structure and stability of children’s playground social networks and their overlap with friendship relations
18. Public-Private Partnerships in Urban Development in the United States
19. The name is absent
20. Using Surveys Effectively: What are Impact Surveys?