Wealth and Health Behavior: Testing the Concept of a Health Cost

63 Pages Posted: 1 Oct 2013 Last revised: 26 Nov 2014

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: November 1, 2014

Abstract

Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by exploiting both inheritances and lottery winnings to test a theory of health behavior. 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 partially explain behavioral differences, and ultimately health outcomes, between wealth groups.

Keywords: health behavior, wealth, health capital, unhealthy consumption

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

Suggested Citation

van Kippersluis, Hans and Galama, Titus J., Wealth and Health Behavior: Testing the Concept of a Health Cost (November 1, 2014). CESR Working Paper No. 2013-001-Rev1, Available at SSRN: https://ssrn.com/abstract=2333967 or http://dx.doi.org/10.2139/ssrn.2333967

Hans Van Kippersluis

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

Burg. Oudlaan 50
Rotterdam, NL 3062 PA
Netherlands

Titus J. Galama (Contact Author)

USC Center for Economic and Social Research ( email )

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

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