A theory of health investment under competing mortality risks.

In this paper, we present a theory of health investment when there are multiple causes of death. We analyze the optimal investment rules and the comparative statics. In particular, we examine the conditions under which a cause-specific intervention has a spillover effect. By spillover effect, we mean a price reduction in one cause-specific health investment would increase all other investments. We also study the strength of the spillover effect, which is measured in terms of cross price elasticities. We find that, while a cause-specific intervention might not be wasteful, the spillover effect would not be large either.