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Health Insurance and Lifestyle Choices: Identifying Ex Ante Moral Hazard in the US Market


  • Anderson E Stanciole

    () (Department of Economics and Related Studies, University of York, Heslington, York YO10 5DD, UK.)


There is extensive debate in the literature about the practical significance of ex ante moral hazard in health insurance markets. This paper uses data from the U.S. Panel Study of Income Dynamics (1999–2003) to estimate a structural model of individual choice of insurance coverage and four lifestyle decisions: heavy smoking, heavy drinking, lack of exercise and obesity. The results show that health insurance has significant incentive effects on lifestyle choices, increasing the propensity to heavy smoking, lack of exercise and obesity and decreasing the propensity to heavy drinking. There is also significant correlation between the errors of each equation. The results might have implications for the design of health financing policies. The Geneva Papers (2008) 33, 627–644. doi:10.1057/gpp.2008.27

Suggested Citation

  • Anderson E Stanciole, 2008. "Health Insurance and Lifestyle Choices: Identifying Ex Ante Moral Hazard in the US Market," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(4), pages 627-644, October.
  • Handle: RePEc:pal:gpprii:v:33:y:2008:i:4:p:627-644

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    Cited by:

    1. Dhaval M. Dave & Robert Kaestner & George L. Wehby, 2015. "Does Medicaid Coverage for Pregnant Women Affect Prenatal Health Behaviors?," NBER Working Papers 21049, National Bureau of Economic Research, Inc.
    2. Botkins, Elizabeth Robison, 2015. "Does Health Insurance Encourage Obesity? A Moral Hazard Study," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 206228, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

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