Journal of Health Economics 21 (2002) 475–495 The family as the health producer—when spouses act strategically Kristian Bolin, Lena Jacobson, Björn Lindgren ∗ Department of Economics, Department of Community Medicine, Lund University Centre for Health Economics (LUCHE), Lund University, P.O. Box 705, 22007 Lund, Sweden Received 20 November 2000; received in revised form 3 May 2001; accepted 5 December 2001 Abstract The Grossman model has been extended recently in order to take account of the fact that most people lead their lives in a family—using frameworks in which family members, respectively, (a) have common preferences and (b) are Nash-bargainers. These models, however, do not consider individual incentives for behaving strategically. In the model presented in this paper, spouses interact strategically both in the production of own health and in the production of health of other family members. We analyse, inter alia, the impact on the distribution of health of changes in family policies, such as child allowance and custody rules. © 2002 Elsevier Science B.V. All rights reserved. JEL classification: I1; I12 Keywords: Health; Human capital; Strategic spouses; Grossman model 1. Introduction The Grossman model (Grossman, 1972, 2000) has been extended recently in order to take into account the fact that most people lead their lives within a family. The structure of a family may change over the lifecycle, but the fact remains that other individuals with whom a person lives influence behaviour. Thus, it has been argued that the family in a way also produces health. Building on previous works by Becker (1973, 1974, 1991), Jacobson (2000) used a framework in which family members have common preferences. The most fundamental insight provided was that not only own income (or wealth) can be used in the production of health, but rather that the family’s joint resources are important. Jacobson’s model implies, for example, that the family will not try to equalise the health capital of ∗ Corresponding author. Tel.: +46-46-222-0658; fax: +46-46-222-0651. E-mail addresses: kristian.bolin@nek.lu.se (K. Bolin), bjorn.lindgren@luche.lu.se (B. Lindgren). 0167-6296/02/$ – see front matter © 2002 Elsevier Science B.V. All rights reserved. PII:S0167-6296(01)00135-7