Why is it an intertemporal optimization problem?
The Grossman model is referred to a model of investment health capital because individuals choose how much to invest in health capital today, but these benefits are not seen immediately they are seen tomorrow. It’s an intertemporal optimization problem because it is a utility maximization problem where your making a decision today will affect your well being tomorrow. If someone discounts the future heavily their behavior will reflect this, and it’s the same for someone who discounts the future at a less value. If they value the future less they will choose to consume more today and invest less today. For someone who puts more weight on the future, they will choose to consume less today and invest more today. Individuals will choose their combination of consumption and investment based on which will give them the highest utility.
