Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/52115 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 5728
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Risky health behaviors such as smoking, drinking alcohol, drug use, unprotected sex, and poor diets and sedentary lifestyles (leading to obesity) are a major source of preventable deaths. This chapter overviews the theoretical frameworks for, and empirical evidence on, the economics of risky health behaviors. It describes traditional economic approaches emphasizing utility maximization that, under certain assumptions, result in Pareto-optimal outcomes and a limited role for policy interventions. It also details nontraditional models (e.g. involving hyperbolic time discounting or bounded rationality) that even without market imperfections can result in suboptimal outcomes for which government intervention has greater potential to increase social welfare. The chapter summarizes the literature on the consequences of risky health behaviors for economic outcomes such as medical care costs, educational attainment, employment, wages, and crime. It also reviews the research on policies and strategies with the potential to modify risky health behaviors, such as taxes or subsidies, cash incentives, restrictions on purchase and use, providing information and restricting advertising. The chapter concludes with suggestions for future research.
Subjects: 
health behaviors
alcohol
tobacco
smoking
drugs
obesity
diet
food
physical activity
public health
public policy
taxation
subsidies
addiction
externalities
advertising
information
behavioral economics
neuroeconomics
human capital
education
prices
sex
income
time preference
peers
bounded rationality
medical costs
employment
wages
crime
hyperbolic discounting
JEL: 
I1
I20
I18
D01
H2
D1
D6
D03
D87
D83
J1
Q18
I24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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