Behaviorally caused loss of health and the use of medical care

This paper extends the analysis of the demand for medical care to an aspect which has previously been ignored: variations in expected, as opposed to experienced, cause of losses of health and the current use of medical care. Losses of health which cannot be prevented by the prior use of medical care are hypothesized to decrease the use of medical care by reducing the rate of return to investments in health, ceteris paribus. The reduction in the rate of return occurs both because these losses curtail the length of the stream of benefits to the use of medical care and because prior use of medical care is not effective in reducing the occurrence of these types of loss. Empirical findings support this hypothesis. Results suggest that differences in expected losses may account for some of the differences in utilization of medical care by sex.