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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17081.
Date of creation: May 2011
Date of revision:
Publication status: published as John Cawley, Christopher J. Ruhm. “Chapter Three - The Economics of Risky Health Behaviors” Handbook of Health Economics, Volume 2, 2011, Pages 95-199
Note: CH ED HC HE LE LS PE
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Other versions of this item:
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D1 - Microeconomics - - Household Behavior
- D6 - Microeconomics - - Welfare Economics
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- I1 - Health, Education, and Welfare - - Health
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- I20 - Health, Education, and Welfare - - Education - - - General
- J1 - Labor and Demographic Economics - - Demographic Economics
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
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