economics of health and health behaviours Flashcards
how do economists study health and health behaviours?
look at the trade-offs individuals make in taking up such behaviours; and the policies employed to curb excessive behaviours
risky health behaviours examples
smoking, drinking, obesity
how is smoking a risky health behaviour
high death rates - deaths per capita from respiratiry cancers rank highest among death rates from malignancies
other diseases - emphysema, COPD etc
no positive physical health benefits from smoking, even at low levels
how is drinking a risky health behaviour
moderate consumption doesn’t harm
excessive consumption harms - cancers, liver disease, mental health
inappropriate behaviours - workplace, driving accidents, violent behaviour
how is obesity a risky health behaviour
elevated mortality - severly obese shorter life expectancy
type 2 diabetes
hormone leptin/hypertension
some types of cancer (increases insulin)
demand for health framework
- health is a key commodity
- medical care is a derived demand
- has consumption properties (direct satisfaction) and investment properties (increased time for producing earnings)
- treated as capital stock which depreciates over time in the absence of investments
- individuals are both producers and consumers of health
- investments in health are costly
Effect of increasing age on demand for health
- Depreciation rate increases with age
- A rise in the depreciation rate decreases health stock Ht
Effect of increasing age on healthcare
- Ambiguous
- As age depreciation rate increases, returns to medical care investments decreases
- If decrease in gross investment returns in greater than decrease in health stock, then they will invest more
- Implies health care expenditures are poor proxy for health capital
- As you age, cost of maintaining health in face of increasing depreciation rate and decreasing returns to investments becomes high and individuals switch away from health capital
Effect of increasing education on demand for health
- raises technical and allocative efficiency of investment
- More educated people demand better health
Effect of increasing education on healthcare
- Ambiguous
- Increased efficiency of production - can produce more health with a set of inputs and may reduce demand for health care
- But marginal benefit of investing in health increases (more healthy days), demand for healthcare might increase
- Generally positive effect of education on medical services, particularly secondary care/specialist services - primary care tend to be used by people with low levels of education
Empirical Evidence - Grossman model
- Predicts strong empirical evidence of large, positive correlation between education and health (remains after controlling for socio-economic status and regardless of measurement)
- Hard to determine if a causal relationship
- Major reason for differences in health outcomes is health behaviours - up to 50% of deaths in US are directly due to health behaviours
Albouy and Lequien (2009)
- policy reforms in France that raised school leaving age
- did not find a causal impact of education on survival rates
Lleras-Muney (2005)
- 1915-1939 - 30 US states changed compulsory schooling laws so people receive more schooling
- 1 extra year of education = increased life expectancy at age 35 by 1.7 years
- ISSUE - analysed effects from lower initial education levels - only applicable for these
cutler and lleras-muney
- looked at how health behaviours differ by education - white individuals who have completed education
- mechanisms
-> command over resources - wage returns to education - accounts for 20% of impact of higher education on health behaviours
-> knowledge - direct knowledge and information processing - accounts for 5-30% of impact
-> personality traits (self-control) and social integrating (relationships) - personality accounts for little, social integrating accounts for a bit more
background of obesity
- misbalance between calorie intake and calorie expenditure
- major public health issue
- particular prevalence in US
- concern over health risks, medical care costs etc
- eating and body weight are economic decisions
- avoidable by behavioural change
- leads to elevated mortality, high rate of diabetes cancer etc, raised medical expenses, reduced productivity
obesity and technological change
- reduction in real price of food - real price of high calorie food fell more than nutritious food
- rise in mass preparation of foods = reduction in times cost of food preparation
- work has become less physically demanding (move from agriculture to services) so people have to pay for exercise rather than do it for their job
neoclassical model of weight
graph
do individuals behave rationally
- standard model assumes so
- but individuals act as if their eating patterns represent mistakes rather than planned behaviour - overeating, high initial costs, most attempts fail
dual decision theory - ruhm (2012)
- 2 parts of the brain - deliberative (rational decision maker) and affective (impulsive)
- consumers understand they overconsume and take actions to constrain their ability to do so, -> leads to lower utility, though
ikeda et al (2010)
- role of discounting - food consumption brings immediate gratification but health consequences occur later
- exponential discounting - rate of discounting is constant at all delays
- hyperbolic discounting - rate of discounting varies with the delay - places larger weight on immediate payoffs - leads to patterns of time-inconsistency and overconsumption
self-control and technological change
- consequences and benefits of food consumption - total marginal costs and marginal benefit
- technological change reduces price and time costs
- reduction in delays likely to affect those with self-control problems
- solution - offer pre-commitment devices -> gym memberships, forfeitable bonds for weight loss
causes of obesity
- technology changes
- rise in incomes
- fast food restaurants
- female labour market participation
- education
- peer effects
obesity and employment
- increased value of women’s time in job market - women work more so less time prepping meals
- anderson et al 2003 - maternal employment and childhood obesity - causal link between hours a mother works and increases in obesity among children
obesity and income
- income increases have ambiguous effect on weight
-> weight gain if food is normal good, weight loss if good health is a normal good
obesity and education
- individuals with a higher education tend to be healthier
- increased schooling may affect weight through health information, healthier diets, increased physical activity, higher income, healthier peers
- HOWEVER - clark and royer (2013) - school leaving age and regression discontinuity finds no impact on BMI
obesity and peer effects
- peers may influence diet or physical activity through bandwagon effects - difficult to determine
- evidence that peers influence weight for women/fitness for men
reasons for government intervention
MARKET FAILURE
- information deficit
- lack of rationality
- externalities
reason for government intervention - information deficit
- information is a public good and free markets tend to under-provide public goods
- government role to sponsor production and dissemination of public goods, and regulate industry to ensure information is accurate and not misleading
- ISSUES - higher educated people tend to be more responsive to information, industry advertising can be powerful (fast food vs gov), information is costly to use
reason for government intervention - lack of rationality
- standard models assume individuals are rational decision makers but individuals are not always rational - children, dual decision theory, time-inconsistent preferences
- solution - regulate advertising to children, ban alcohol and cigarette for those under 18 years old, incentivise fruit and veg
reason for government intervention - externalities
- externalities occur when unhealthy behaviours harms the welfare of others - passive smoking etc
- externalities through consumers passing on costs to taxpayers
- solution - impose tax on risky goods e.g. cigarettes, alcohol etc
externalities and policy response
- tax cigarettes
- tax on alcohol but alcohol may have some health benefits
- tax for obesity? - what foods should be taxed? - SSBs
issues with taxing
- tend to be regressive - low income individuals tend to engage more in poor health behaviours, potential trade off between promoting health and increasing vertical equity
- pass-through rate of taxes - tax may be internalised?
- effects of taxes on outcomes depends on substitutes
SSBs - Fletcher et al 2010
- exploits state level changes in taxation on SSBs across time
- find no effect of taxes on probability of consuming SSBs but find impact on amount consumed
- challenge - no large tax increases to infer behavioural changes
SSBs - UK Industry Levy
- 2018 - Soft Drink Industry Levy
- 18p per litre tax for drinks with 5-8g of sugar per 100ml, 24p per litre tax for drinks more than 8g of sugar per 100ml
- Levy on producers rather than consumers - can choose to reduce sugar content, absorb the tax, or pass tax onto consumers as higher prices
