The Meaning of Death : Some Numerical Simulations of a Model of Healthy and Unhealthy Consumption

This paper presents some numerical simulations of a model of healthy and unhealthy consumption to investigate the impact of various terminal conditions on an individual's life-span, pathways of consumption and health. A 'benchmark' model, in which both the life-span and the individual's 'death' stock of health are fixed, is compared to (i) a version in which the 'death' stock of health is freely chosen; (ii) a version in which life-span is freely chosen; (iii) a version in which both the 'death' stock of health and life-span are freely chosen. Results show how the choice of terminal conditions has a striking impact on both optimal plans and comparative static/dynamic predictions and raise questions about how to model 'death' in deterministic demand for health models. Results also illustrate the application of iterative processes to determine an optimal life-span in continuous time models, the role of the marginal value of health capital in determining optimal plans, and the importance of checking the second-order conditions for the optimal choice of life-span in such models