Why People Demand Health In Your Own Words Use Utility Analy
Why People Demand Healthin Your Own Words Use Utility Analysis To Exp
People demand health because it significantly contributes to their overall well-being and ability to function effectively in daily life. From an economic perspective, utility analysis helps explain this demand by illustrating how individuals derive satisfaction or utility from being healthy. When a person is healthy, they experience higher utility levels, which motivates them to seek health maintenance and improvement. Conversely, illness diminishes utility, prompting individuals to invest in healthcare services or preventive measures to restore or enhance their health status.
The Law of Diminishing Marginal Utility (DMU) plays a crucial role in understanding healthcare demand. According to DMU, as an individual consumes more of a good or service— in this case, health or health-related services—the additional utility gained from each additional unit decreases. For example, the first dose of medicine or initial health intervention provides substantial utility by alleviating symptoms or preventing further deterioration. However, subsequent treatments tend to offer progressively less additional benefit, reflecting diminishing marginal utility. This concept helps explain why individuals are willing to pay for health up to a point where the marginal utility equals the marginal cost, leading to a demand curve that slopes downward.
Moreover, the price elasticity of demand for medical care varies depending on a person's health status. Typically, healthier individuals tend to have a more elastic demand for healthcare because they perceive less immediate benefit and are more sensitive to price changes. For example, a healthy person might forgo a non-urgent medical check-up if the price increases, whereas a person with a chronic illness or acute condition—being in a state of lower utility—has a more inelastic demand and is less sensitive to price fluctuations because their need for care is more urgent. Conversely, individuals with poor health or chronic conditions may demand healthcare services regardless of price changes because the utility derived from treatment remains high for them.
References
- Folland, S., Goodman, A. C., & Stano, M. (2017). The Economics of Health and Health Care. Routledge.
- Phelps, C. E. (2016). Health Economics. Pearson Education.