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Wealth and health behavior: Testing the concept of a health cost

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  • van Kippersluis, Hans
  • Galama, Titus J.

Abstract

Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by exploiting both inheritances and lottery winnings to test a theory of health behavior. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed partially explain behavioral differences, and ultimately health outcomes, between wealth groups.

Suggested Citation

  • van Kippersluis, Hans & Galama, Titus J., 2014. "Wealth and health behavior: Testing the concept of a health cost," European Economic Review, Elsevier, vol. 72(C), pages 197-220.
  • Handle: RePEc:eee:eecrev:v:72:y:2014:i:c:p:197-220
    DOI: 10.1016/j.euroecorev.2014.10.003
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Holger STRULIK, 2015. "A Closed-form Solution for the Health Capital Model," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 301-316, September.
    2. repec:eee:socmed:v:192:y:2017:i:c:p:36-48 is not listed on IDEAS
    3. repec:spr:jopoec:v:30:y:2017:i:4:d:10.1007_s00148-017-0651-2 is not listed on IDEAS
    4. Titus J. Galama & Adriana Lleras-Muney & Hans van Kippersluis, 2018. "The Effect of Education on Health and Mortality: A Review of Experimental and Quasi-Experimental Evidence," NBER Working Papers 24225, National Bureau of Economic Research, Inc.
    5. Strulik, Holger, 2016. "The return to education in terms of wealth and health," Center for European, Governance and Economic Development Research Discussion Papers 293, University of Goettingen, Department of Economics.

    More about this item

    Keywords

    Health behavior; Wealth; Health capital; Unhealthy consumption;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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