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Ex-ante Moral Hazard and Primary Prevention, evidence from Portugal

Author

Listed:
  • Aida Isabel Tavares

    (Departamento de Economia e Gestão Industrial, GOVCOPP, Universidade de Aveiro)

  • Pedro Pita Barros

    (Economics Faculty of Universidade Nova de Lisboa - Portugal, and CEPR (London))

Abstract

This paper provides evidence on ex-ante moral hazard in Portugal. The issue is addressed in a setting where people buy voluntary private health insurance, on top of existing Government coverage. We identify the main factors that lead people to adopt healthy lifestyles, such as taking up sports and not smoking, which are associated with primary prevention. Moreover, it allows for an inference of the role of risk aversion of individuals in these decisions. We use a GHK recursive simulator of multivariate probit for insurance demand, smoking and sporting decisions, to provide joint estimates taking into consideration potential endogeneity of these decisions. Our results indicate that there is some evidence of ex-ante moral hazard with respect to primary prevention behaviors. Di¤erences in risk aversion across individuals do not seem to play a primary role in explaining distinct life styles.

Suggested Citation

  • Aida Isabel Tavares & Pedro Pita Barros, 2011. "Ex-ante Moral Hazard and Primary Prevention, evidence from Portugal," Working Papers de Economia (Economics Working Papers) 56, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
    • Handle: RePEc:ave:wpaper:562011
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    References listed on IDEAS

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    More about this item

    Keywords

    ex-ante moral hazard; prevention; lifestyles;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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