The Effects of Relative Food Prices on Obesity – Evidence from China: 1991-2006

This paper explores the effects of relative food prices on body weight and body fat over time in China. We study a cohort of 15,000 adults from over 200 communities in China, using the longitudinal China Health and Nutrition Survey (1991-2006). While we find that decreases in the price of energy-dense foods have consistently led to elevated body fat, this price effect does not always hold for body weight. These findings suggest that changes in food consumption patterns induced by varying food prices can increase percentage body fat to risky levels even without substantial weight gain. In addition, food prices and subsidies could be used to encourage healthier food consumption patterns and to curb obesity.Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Health Economics and Policy,

Medical Expenditure Risk and Household Portfolio Choice

As health care costs continue to rise, medical expenses have become an increasingly important contributor to financial risk. Economic theory suggests that when background risk rises, individuals will reduce their exposure to other risks. This paper presents a test of this theory by examining the effect of medical expenditure risk on the willingness of elderly Medicare beneficiaries to hold risky assets. We measure exposure to medical expenditure risk by whether an individual is covered by supplemental insurance through Medigap, an employer, or a Medicare HMO. We account for the endogeneity of insurance choice by using county variation in Medigap prices and non-Medicare HMO market penetration. We find that having Medigap or an employer policy increases risky asset holding by 6 percentage points relative to those enrolled in only Medicare Parts A and B. HMO participation increases risky asset holding by 12 percentage points. Given that just 50 percent of our sample holds risky assets, these are economically sizable effects. It also suggests an important link between the availability and pricing of health insurance and the financial behavior of the elderly.

Understanding Health Disparities Across Education Groups

Better-educated people are healthier, but the magnitude of the relationship between health and education varies substantially across groups and over time. We undertake a theoretical and empirical study of how health disparities by education vary over time and across the population, according to underlying health characteristics and market forces. One surprising implication of the theory we develop is that health disparities actually increase as the price of health inputs falls. Therefore, government subsidies for health care research or even universal health insurance may worsen health inequality. Moreover, technological progress in health care will tend to raise inequality over time. The theory also implies that health disparities will be larger for sicker, older and more vulnerable groups. The first prediction is consistent with significant expansions in health disparities over the last thirty years in the US. The second is consistent with observed patterns in the National Health Interview Survey, the Medicare Current Beneficiary Survey, and the Framingham Heart Study. The returns to schooling are twice as high for the chronically ill and for those out of the labor force, and they tend to rise with age.

Prescription Drug Coverage and Elderly Medicare Spending

The introduction of Medicare Part D has generated interest in the cost of providing drug coverage to the elderly. Of paramount importance -- often unaccounted for in budget estimates -- are the salutary effects that increased prescription drug use might have on other Medicare spending. This paper uses longitudinal data from the Medicare Current Beneficiary Survey (MCBS) to estimate how prescription drug benefits affect Medicare spending. We compare spending and service use for Medigap enrollees with and without drug coverage. Because of concerns about selection, we use variation in supply-side regulations of the individual insurance market -- including guaranteed issue and community rating -- as instruments for prescription drug coverage. We employ a discrete factor model to control for individual-level heterogeneity that might induce bias in the effects of drug coverage. Medigap prescription drug coverage increases drug spending by $170 or 22$350 or 13% (in 2000 dollars). Medigap prescription drug coverage reduces Medicare Part B spending, but the estimates are not statistically significant. Overall, a $1 increase in prescription drug spending is associated with a$2.06 reduction in Medicare spending. Furthermore, the substitution effect decreases as income rises, and thus provides support for the low-income assistance program of Medicare Part D.

Socioeconomic Differences in the Adoption of New Medical Technologies

New medical technologies hold tremendous promise for improving population health, but they also raise concerns about exacerbating already large differences in health by socioeconomic status (SES). If effective treatments are more rapidly adopted by the better educated, SES health disparities may initially expand even though the health of those in all groups eventually improves. Hypertension provides a useful case study. It is an important risk factor for developing cardiovascular disease, the condition is relatively common, and there are large differences in rates of hypertension by education. This paper examines the short and long-term diffusion of two important classes of anti-hypertensives - ACE inhibitors and calcium channel blockers - over the last twenty-five years. Using three prominent medical surveys, we find no evidence that the diffusion of these drugs into medical practice favored one education group relative to another. The findings suggest that - at least for hypertension - SES differences in the adoption of new medical technologies are not an important reason for the SES health gradient.

Market Evidence of Misperceived Prices and Mistaken Mortality Risks

We construct and implement a test of rational consumer behavior in a highstakes financial market. In particular, we test whether consumers make systematic mistakes in perceiving their mortality risks. We implement this test using data from secondary life insurance markets where consumers with a lifethreatening illness sell their life insurance policies to firms in return for an up-front payment. We compare predictions from two models: one with consumers who correctly perceive their mortality risk, and one with consumers who are misguided about their life expectancy, and find that our data are most consistent with the predictions made by the second model.

Criminal Prosecution and HIV-related Risky Behavior

We evaluate the consequences of prosecuting HIV+ people who expose others to the risk of infection. We show that the effect of aggressive prosecutions on the spread of HIV is a priori ambiguous. Aggressive prosecutions tax risky behavior and thus deter unsafe sex and limit the number of sexual partners. However, such penalties might also create unique incentives for having sex with more promiscuous partners such as prostitutes and consequently increase the spread of HIV. We test these predictions using unique nationally representative data on the sexual activity and prosecutions of HIV+ persons. We find that more aggressive prosecutions are associated with a reduction in the number of sexual partners and increased likelihood of safe sex. However, they are also associated with increased likelihood of having sex with prostitutes and not disclosing HIV+ status. Overall, our estimates imply that doubling the prosecution rate could decrease the number of new HIV infections by 12% over a ten-year period.

The Link Between Public and Private Insurance and HIV-Related Mortality

As policymakers consider expanding insurance coverage for HIV+ individuals, it is useful to ask if insurance has any affect on health outcomes; and, if so, whether public insurance is as efficacious as private insurance in preventing premature deaths among HIV+ patients. Using data from a nationally representative cohort of HIV-infected persons receiving regular medical care, we estimate the impact of different types of insurance on mortality in this population. We find that ignoring observed and unobserved health status leads one to conclude (misleadingly) that insurance may not be protective for HIV patients. After accounting for observed and unobserved heterogeneity, insurance does protect against premature death, but private insurance is more effective than public coverage. The better outcomes associated with private insurance are attributable to the more restrictive prescription drug policies of Medicaid.

HIV Breakthroughs and Risk Sexual Behavior

Recent breakthroughs in the treatment of HIV have coincided with an increase in infection rates and an eventual slowing of reductions in HIV mortality. These trends may be causally related, if treatment improves the health and functional status of HIV+ individuals and allows them to engage in more sexual risk-taking. We examine this hypothesis empirically using access to health insurance as an instrument for treatment status. We find that treatment results in more sexual risk-taking by HIV+ adults, and possibly more of other risky behaviors like drug abuse. This relationship implies that breakthroughs in treating an incurable disease like HIV can increase precautionary behavior by the uninfected and thus reduce welfare. We also show that, in the presence of this effect, treatment and prevention are social complements for incurable diseases, even though they are substitutes for curable ones. Finally, there is less under-provision of treatment for an incurable disease than a curable one, because of the negative externalities associated with treating an incurable disease.