Health Insurance and Life Style Choices: Identifying the Ex Ante Moral Hazard

Anderson Stanciole

No 2007-10, IRISS Working Paper Series from IRISS at CEPS/INSTEAD

Abstract: There is extensive debate in the literature about the practical significance of the concept of ex-ante moral hazard. This paper uses data from the 1999-2003 PSID waves to estimate a structural model of individual choice of insurance coverage and four life style related decisions: heavy smoking, heavy drinking, sedentarism and obesity. The results show that health insurance has significant incentive effects on life style choices, increasing the propensity to heavy smoking, sedentarism and obesity. Somewhat surprisingly, however, health insurance decreases the propensity to heavy drinking. There is also significant correlation among the errors of each equation. The results might also have implications for the design of health financing policies.

Keywords: ex ante moral hazard; insurance; life Style; Max Simulated Likelihood (search for similar items in EconPapers)
JEL-codes: C15 I11 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2007-11
New Economics Papers: this item is included in nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:irs:iriswp:2007-10

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