There is extensive debate in the literature about the practical significance of the concept of ex-ante moral hazard. This paper uses data from the 1999-2003 PSID waves to estimate a structural model of individual choice of insurance coverage and four life style related decisions: heavy smoking, heavy drinking, sedentarism and obesity. The results show that health insurance has significant incentive effects on life style choices, increasing the propensity to heavy smoking, sedentarism and obesity. Somewhat surprisingly, however, health insurance decreases the propensity to heavy drinking. There is also significant correlation among the errors of each equation. The results might also have implications for the design of health financing policies.
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Length: 36 pages Date of creation: Nov 2007 Date of revision: Publication status: Published in The Geneva Papers on Risk and Insurance Issues and Practice, vol.33 (2008), pp. 627–644. doi:10.1057/gpp.2008.27 Handle: RePEc:irs:iriswp:2007-10
Find related papers by JEL classification: I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Frank A. Sloan & Jan Ostermann & Christopher Conover & Donald H. Taylor, Jr. & Gabriel Picone, 2006.
"The Price of Smoking,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262693453.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)