State and self investments in health

E Fichera1 and M Sutton
Authors registered in the RePEc Author Service: Eleonora Fichera

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: We consider how individuals' decisions on their health behaviours depend on the level of investment in their health provided by the State. We develop the model provided by Ehrlich and Becker (1972) and Peltzman (1975) and we show that higher levels of protection provided by the State (either through the increased availability or effectiveness of medical care) can crowd out or reinforce self-insurance. We apply this model to the smoking cessation decision made by individuals diagnosed with a cardiovascular disease in waves of the Health Survey of England between 1993 and 2006. There has been a considerable increase in the proportion of these individuals who receive prescriptions of statins from the State, a highly effective drug that reduces the probability of further heart attacks and premature death. We nd that the probability of quitting smoking is increased by four percentage points amongst those individuals prescribed statins. This result is robust to allowing for the direct effects of smoking advice. When the potential endogeneity of doctors' decision to prescribe statins is dealt with using variables in national guidelines, we find that unobservable characteristics which make people more prone to stop smoking reduce the probability of receiving statins and the evidence of the complementarity between quitting smoking and prescription of statins is confirmed.

Keywords: Crowding-out; moral hazard; preventative behaviour; drugs (search for similar items in EconPapers)
JEL-codes: C25 C35 D01 I12 I18 (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: State and self investments in health (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:10/23

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