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

Aida Isabel Tavares and Pedro Barros

No 56, Working Papers de Economia (Economics Working Papers) from Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro

Abstract: 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.

Keywords: ex-ante moral hazard; prevention; lifestyles (search for similar items in EconPapers)
JEL-codes: D12 D82 I10 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2011-07
New Economics Papers: this item is included in nep-cta and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:ave:wpaper:562011

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