The point of departure in this section is that there is randomness in the
exogenous determinants of health. The individual’s level of health is affected by
changes in the climate, exposure to viruses and germs, etc., so the incidence and
the size of illness is uncertain. 13 Therefore the individual cannot with certainty
reach a specific level of health i.e., the individual is uncertain as to what his or
her level of health will be., but only increase the probability of achieving it.
Health capital can thus be considered to be a stochastic variable. It is furthermore
assumed, apart from what was assumed in Section 2, that the individual is
risk-averse.