5.) Rational Illness Flashcards
1
Q
Why do people engage in health deteriorating activities?
A
Individuals are maximising their utility function, these behaviours may be addictive
2
Q
What is time preference?
A
People value present utility more than future utility. The present value of utility is discounted.
3
Q
How do governments try to change behaviours that decrease health and how effective are they?
A
Offering incentives: difficult for addictive habits
Taxation: moved to inelastic demand, large revenue earner, poor at reducing consumption, also increases crime
Prohibition: smoking ban in public places
Encourage substitutes: no direct subs, expensive
