The Economics of Risky Health Behaviors
AbstractRisky health behaviors such as smoking, drinking alcohol, drug use, unprotected sex, and poor diets and sedentary lifestyles (leading to obesity) are a major source of preventable deaths. This chapter overviews the theoretical frameworks for, and empirical evidence on, the economics of risky health behaviors. It describes traditional economic approaches emphasizing utility maximization that, under certain assumptions, result in Pareto-optimal outcomes and a limited role for policy interventions. It also details nontraditional models (e.g. involving hyperbolic time discounting or bounded rationality) that even without market imperfections can result in suboptimal outcomes for which government intervention has greater potential to increase social welfare. The chapter summarizes the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime. It also reviews the research on policies and strategies with the potential to modify risky health behaviors, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising. The chapter concludes with suggestions for future research.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5728.
Length: 163 pages
Date of creation: May 2011
Date of revision:
Publication status: published in: Mark V. Pauly, Thomas G. McGuire, and Pedro P. Barros (eds.), Handbook of Health Economics, Volume 2. New York: Elsevier, 2012, 95-199 95-199
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Other versions of this item:
- I1 - Health, Education, and Welfare - - Health
- I20 - Health, Education, and Welfare - - Education - - - General
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- D1 - Microeconomics - - Household Behavior
- D6 - Microeconomics - - Welfare Economics
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- J1 - Labor and Demographic Economics - - Demographic Economics
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
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