Why the Rich Drink More and Smoke Less: The Impact of Wealth on Health Behaviors

52 Pages Posted: 17 Apr 2013

See all articles by Hans van Kippersluis

Hans van Kippersluis

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Titus J. Galama

USC Center for Economic and Social Research

Date Written: February 24, 2013

Abstract

Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by developing a theory of health behavior, and exploiting both lottery winnings and inheritances to test the theory. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed provide an explanation for behavioral differences, and ultimately health outcomes, between wealth groups.

Keywords: Consumption, health, health capital, health behavior, wealth

JEL Classification: D91, I10, I12, I14, J24

Suggested Citation

van Kippersluis, Hans and Galama, Titus J., Why the Rich Drink More and Smoke Less: The Impact of Wealth on Health Behaviors (February 24, 2013). Netspar Discussion Paper No. 02/2013-007, Available at SSRN: https://ssrn.com/abstract=2251190 or http://dx.doi.org/10.2139/ssrn.2251190

Hans Van Kippersluis (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

Burg. Oudlaan 50
Rotterdam, NL 3062 PA
Netherlands

Titus J. Galama

USC Center for Economic and Social Research ( email )

Playa Vista, CA
United States
+310 430 6358 (Phone)

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