State and self investments in health
AbstractWe consider how individuals' decisions on their health behaviours depend on the level of investment in their health provided by the State. We develop the model provided by Ehrlich and Becker (1972) and Peltzman (1975) and we show that higher levels of protection provided by the State (either through the increased availability or effectiveness of medical care) can crowd out or reinforce self-insurance. We apply this model to the smoking cessation decision made by individuals diagnosed with a cardiovascular disease in waves of the Health Survey of England between 1993 and 2006. There has been a considerable increase in the proportion of these individuals who receive prescriptions of statins from the State, a highly effective drug that reduces the probability of further heart attacks and premature death. We nd that the probability of quitting smoking is increased by four percentage points amongst those individuals prescribed statins. This result is robust to allowing for the direct effects of smoking advice. When the potential endogeneity of doctors' decision to prescribe statins is dealt with using variables in national guidelines, we find that unobservable characteristics which make people more prone to stop smoking reduce the probability of receiving statins and the evidence of the complementarity between quitting smoking and prescription of statins is confirmed.
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Bibliographic InfoPaper provided by HEDG, c/o Department of Economics, University of York in its series Health, Econometrics and Data Group (HEDG) Working Papers with number 10/23.
Date of creation: Sep 2010
Date of revision:
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Crowding-out; moral hazard; preventative behaviour; drugs;
Other versions of this item:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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