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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.

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  • 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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    6. Strulik, Holger, 2015. "A Closed-Form Solution For The Health Capital Model," Journal of Demographic Economics, Cambridge University Press, vol. 81(3), pages 301-316, September.
    7. Lleras-Muney, Adriana & Price, Joseph & Yue, Dahai, 2022. "The association between educational attainment and longevity using individual-level data from the 1940 census," Journal of Health Economics, Elsevier, vol. 84(C).
    8. Martins, Igor & Cilliers, Jeanne & Fourie, Johan, 2019. "Legacies of Loss: The intergenerational outcomes of slaveholder compensation in the British Cape Colony," Lund Papers in Economic History 197, Lund University, Department of Economic History.
    9. Seonghoon Kim & Andrew J. Oswald, 2021. "Happy Lottery Winners and Lottery‐Ticket Bias," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 317-333, June.
    10. Titus J Galama & Hans van Kippersluis, 2019. "A Theory of Socio-economic Disparities in Health over the Life Cycle," The Economic Journal, Royal Economic Society, vol. 129(617), pages 338-374.
    11. Atalay, Kadir & Edwards, Rebecca & Liu, Betty Y.J., 2017. "Effects of house prices on health: New evidence from Australia," Social Science & Medicine, Elsevier, vol. 192(C), pages 36-48.
    12. Peng Nie & Qing Li & Alan A. Cohen & Alfonso Sousa-Poza, 2021. "In search of China’s income-health gradient: a biomarker-based analysis," Applied Economics, Taylor & Francis Journals, vol. 53(48), pages 5599-5618, October.
    13. James Broughel & W. Kip Viscusi, 2021. "The Mortality Cost Of Expenditures," Contemporary Economic Policy, Western Economic Association International, vol. 39(1), pages 156-167, January.
    14. Julien Albertini & Anthony Terriau, 2019. "Wealth and health in South Africa," Working Papers halshs-02073800, HAL.
    15. Oscar Erixson, 2017. "Health responses to a wealth shock: evidence from a Swedish tax reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1281-1336, October.
    16. Muchomba, Felix M., 2021. "Parents’ assets and child marriage: Are mother’s assets more protective than father’s assets?," World Development, Elsevier, vol. 138(C).
    17. Bénédicte Apouey & Isabelle Chort, 2018. "Are rising house prices really good for your brain? House value and cognitive functioning among older Europeans," Working Papers hal-02141060, HAL.
    18. Isabelle CHORT & Bénédicte APOUEY, 2018. "Are rising house prices really good for your brain? House value and cognitive functioning among older Europeans," Working Papers 2017-2018_7, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Oct 2018.
    19. Jacob Maxwell & Robert Pryce & Luke B. Wilson, 2022. "The impact of increasing the United Kingdom national minimum wage on self‐reported health," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1167-1183, June.
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    21. Seonghoon Kim & Kanghyock Koh, 2020. "Does Early Access To Pension Wealth Improve Health?," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1783-1794, October.
    22. Strulik, Holger, 2018. "The return to education in terms of wealth and health," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 1-14.

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    More about this item

    Keywords

    Health behavior; Wealth; Health capital; Unhealthy consumption;
    All these keywords.

    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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