Arbeitspapier

Moral Hazard Heterogeneity: Genes and Health Insurance Influence Smoking after a Health Shock

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.

Language
Englisch

Bibliographic citation
Series: IZA Discussion Papers ; No. 14176

Classification
Wirtschaft
Health Behavior
Health Insurance, Public and Private
Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Subject
moral hazard
genetics
smoking
medicare

Event
Geistige Schöpfung
(who)
Biroli, Pietro
Zwyssig, Laura
Event
Veröffentlichung
(who)
Institute of Labor Economics (IZA)
(where)
Bonn
(when)
2021

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Biroli, Pietro
  • Zwyssig, Laura
  • Institute of Labor Economics (IZA)

Time of origin

  • 2021

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