Technical note 4: Household Production
The concept of the production function has been extended to the individual
(or household as the traditional unit of economic analysis). Here, in order to
maximise his or her owɪi health state, the individual incorporates various
inputs; health care, education, lifestyle changes etc, in order to 'produce’ a
level of health. In this model, the individual’s genetic make up determines
the production function, in that it constrains the individual’s ability to
transform inputs into health outcomes. It is analogous to the state of
technology in physical production processes,
This approach has been taken to its extreme by Grossman (1972) whose
model of the demand for health allows one to predict one’s optimum life
span! However, the notion of household production is important not for its
predictive capacity but for its conceptual insights. It shows clearly that
health care is not the only determinant of good health and that good health
is not the only source of well-being. Households produce not only their own
health, but also wealth, leisure activities, housing and so on. Households
must trade-off health with other sources of satisfaction. This model can be
used to explain many ‘unhealthy* choices. For example, Graham’s study of
the smoking habits of single mothers showed that many felt they could not
cope with their child-minding responsibilities without the support of tobacco
(Graham 1987). These individuals judged the loss of welfare in giving up
cigarettes to be greater than the welfare value of the potential health
benefits.
The implications of this, for example, for health promotion programs, is that
if they are to succeed, they must not only change the information available
to individuals but also change the incentives which they face in order to
make health promoting behavioural change in the best interests of those
concerned (Birch and Stoddart 1989).
What of prevention? In terms of this model, prevention can work in two ways;
directly or indirectly. Direct prevention programs include immunisation and
cervical cancer screening which have a direct affect on the production of health.
Indirect programs focus ’upstream’ to produce better health either by changing
individuals’ knowledge and behaviour or by changing the environment in which
they make choices about their lifestyle "making healthy choices easy choices"
(McKinlay 1979). Examples of the former include healthy diet programs and
stop smoking programs. Examples of the latter include improved food
13