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Ex-ante Moral Hazard and Primary Prevention, evidence from Portugal

  • Aida Isabel Tavares


    (Departamento de Economia e Gestão Industrial, GOVCOPP, Universidade de Aveiro)

  • Pedro Pita Barros


    (Economics Faculty of Universidade Nova de Lisboa - Portugal, and CEPR (London))

This paper provides evidence on ex-ante moral hazard in Portugal. The issue is addressed in a setting where people buy voluntary private health insurance, on top of existing Government coverage. We identify the main factors that lead people to adopt healthy lifestyles, such as taking up sports and not smoking, which are associated with primary prevention. Moreover, it allows for an inference of the role of risk aversion of individuals in these decisions. We use a GHK recursive simulator of multivariate probit for insurance demand, smoking and sporting decisions, to provide joint estimates taking into consideration potential endogeneity of these decisions. Our results indicate that there is some evidence of ex-ante moral hazard with respect to primary prevention behaviors. Di¤erences in risk aversion across individuals do not seem to play a primary role in explaining distinct life styles.

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Paper provided by Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro in its series Working Papers de Economia (Economics Working Papers) with number 56.

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Length: 32 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:ave:wpaper:562011
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Phone: +351 234 370 361
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  1. Y. Machnes, 2006. "The demand for private health care under national health insurance," The European Journal of Health Economics, Springer, vol. 7(4), pages 265-269, December.
  2. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  3. Brad R. Humphreys & Jane E. Ruseski, 2006. "Economic Determinants of Participation in Physical Activity and Sport," Working Papers 0613, International Association of Sports Economists;North American Association of Sports Economists.
  4. Christophe Courbage & Augustin de Coulon, 2004. "Prevention and Private Health Insurance in the U.K," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 29(4), pages 719-727, October.
  5. Lorenzo Cappellari & Stephen P. Jenkins, 2003. "Multivariate probit regression using simulated maximum likelihood," Stata Journal, StataCorp LP, vol. 3(3), pages 278-294, September.
  6. Dhaval Dave & Robert Kaestner, 2006. "Health Insurance and Ex Ante Moral Hazard: Evidence from Medicare," NBER Working Papers 12764, National Bureau of Economic Research, Inc.
  7. Barros, Pedro Luis Pita & Machado, Matilde Pinto & Sanz-de-Galdeano, Anna, 2006. "Moral Hazard and the Demand for Health Services: A Matching Estimator Approach," CEPR Discussion Papers 5488, C.E.P.R. Discussion Papers.
  8. Lisa Farrell & Michael A. Shields, 2002. "Investigating the economic and demographic determinants of sporting participation in England," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 165(2), pages 335-348.
  9. Besley, Timothy & Hall, John & Preston, Ian, 1998. "Private and public health insurance in the UK," European Economic Review, Elsevier, vol. 42(3-5), pages 491-497, May.
  10. Viscusi, W Kip, et al, 2000. " Smoking Risks in Spain: Part III--Determinants of Smoking Behavior," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 213-34, November.
  11. William H. Greene, 1998. "Gender Economics Courses in Liberal Arts Colleges: Further Results," The Journal of Economic Education, Taylor & Francis Journals, vol. 29(4), pages 291-300, January.
  12. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  13. de Preux, L, 2010. "Ex Ante Moral Hazard and Anticipatory Behaviour: Some Evidence," Health, Econometrics and Data Group (HEDG) Working Papers 10/13, HEDG, c/o Department of Economics, University of York.
  14. Colm Harmon & Brian Nolan, 2001. "Health insurance and health services utilization in Ireland," Health Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 135-145.
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