Subsidizing Health-Conscious Behavior Now or Later

Konferenzbeitrag

We examine subsidies for health care when consumers have present-biased preferences, which lead them to underestimate the effect of today s consumption on future health. We compare immediate subsidies paid for health-conscious consumption and future subsidies rewarding a good health outcome. We show that, while both policies can implement the first best choice, doing so by future subsidies results in higher costs for the government. This arises since the individual anticipates that, from today s perspective, she will make biased use of future subsidies. Hence, in order to create the same incentive effect, a future subsidy must be higher in present value terms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Public Economics: Theory ; No. F06-V3

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Health: Government Policy; Regulation; Public Health

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Danilowicz, Kamila ; Schwager, Robert
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/80008
• Last update: 10.03.2025, 11:42 AM CET