Publisher:
IZA - Institute of Labor Economics, Bonn, Germany
Decision-making in the realm of health behaviors, such as smoking or drinking, is influenced both by biological factors, such as genetic predispositions, as well as environmental factors, such as financial liquidity and health insurance status. We...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 4
Inter-library loan:
No inter-library loan
Decision-making in the realm of health behaviors, such as smoking or drinking, is influenced both by biological factors, such as genetic predispositions, as well as environmental factors, such as financial liquidity and health insurance status. We show how the choice of smoking after a cardio-vascular health shock is jointly determined by the interplay between these biological and environmental constraints. Individuals who suffer a health shock when uninsured are 25.6 percentage points more likely to reduce smoking, but this is true only for those who have a low index of genetic predisposition to smoking. Individuals with a low index of genetic predisposition are more strategic and flexible in their behavioral response to an external shock. This differential elasticity of response depending on your genetic variants is evidence of individual-level heterogeneity in moral hazard. These results suggest that genetic heterogeneity is a factor that should be considered when evaluating the effectiveness and fairness of health insurance policies.
