1,721,034 research outputs found
Negligible senescence: An economic life cycle model for the future.
Full text linkWe propose a model of aging and health deficit accumulation model with an infinite time horizon and a steady state of constant health. The time of death is uncertain and endogenous to lifestyle and health behavior. This setup can be conceptualized as a strive for immortality that is never reached. We discuss adjustment dynamics and show that the new setup is particularly useful to understand aging of the oldest old, i.e. of individuals for which morbidity and mortality have reached a plateau. We then show how the existence of a steady state can be used to perform comparative dynamics exercises analytically. As an illustration we investigate the effects of more expensive health investment and of advances in medical technology on optimal short run and long run health behavior
Non-separable time preferences, novelty consumption and body weight: Theory and evidence from the East German transition to capitalism
No full textThis paper develops a dynamic model to illustrate how diet and body weight change when novel food products become available to consumers. We propose a microfounded test to empirically discriminate between habit and taste formation in intertemporal preferences. Moreover, we show that ‘novelty consumption’ and endogenous preferences can explain the persistent correlation between economic development and obesity. By empirically studying the German reunification, we find that East Germans consumed more novel Western food and gained more weight than West Germans when a larger variety of food products became readily accessible after the fall of the Wall. The observed consumption patterns suggest that food consumption features habit formation
Harm reduction for addictive consumption: When does it improve health and when does it backfire?
No full text: Some harm reduction strategies encourage individuals to switch from a harmful addictive good to a less harmful addictive good; examples include e-cigarettes (substitutes for combustible cigarettes) and methadone and buprenorphine (substitutes for opioids). These have proven to be controversial. Advocates argue that people struggling with addiction benefit because they can switch to a less harmful substance, but opponents argue that this could encourage abstainers to begin using the harm-reduction method or even, eventually, the original addictive good. This paper builds on theories of addiction to model the introduction of a harm reduction method, and demonstrates the conditions under which each side is correct
Rational agents might be overweight, underweight, or the physiologically optimal weight
Full text linkLevy (2002) and Dragone (2009) showed that rational agents tend to become overweight. Their result is shown to be equivalent to an assumption placed on the instantaneous utility function, and their model is shown to admit multiple steady states, including being underweight
Solving the Milk Addiction Paradox
Full text linkThe milk addiction paradox refers to an empirical finding in which commodities that are typically considered to be non addictive, such as milk, appear instead to be addictive. This result seems more likely when there is persistence in consumption and when using aggregate data, and it suggests that the AR(2) model typically used in the addiction literature is prone to produce spurious result in favor of rational addiction. Using both simulated and real data, we show that the milk addiction paradox disappears when estimating the data using an AR(1) linear specification that describes the saddle-path solution of the rational addiction model. The AR(1) specification is able to correctly discriminate between rational addiction and simple persistence in the data, to test for the main features of rational addiction, and to produce unbiased estimates of the short and long-run elasticity of demand. These results hold both with individual and aggregated data, and they suggest that, for testing rational addiction, the AR(1) model is a better empirical alternative than the canonical AR(2) model
Testing Rational Addiction: When Lifetime is Uncertain, One Lag is Enough
Full text linkThe rational addiction model is usually tested by estimating a linear second-order difference Euler equation, which may produce unreliable estimates. We show that a linear first-order difference equation is a better alternative. This empirical specification is appropriate under the reasonable assumption that people are uncertain about the time of their death, it is based on the same structural assumptions used in the literature, and it retains all policy implications of the deterministic rational addiction model. It is also empirically convenient because it is simple, it allows using efficient estimation strategies that do not require instrumental variables, and it is robust to the possible non-stationarity of the data. As an application we estimate the demand for smoking in the US from 1970 to 2016, and we show that it is consistent with the rational addiction model
Crime and the legalization of recreational marijuana
Full text linkFirst-pass evidence is provided that the legalization of the cannabis market across US states is inducing a crime drop.
We exploit the staggered legalization of recreational marijuana enacted by the adjacent states of Washington (end of 2012) and Oregon (end of 2014). Combining county-level difference-in-differences and spatial regression discontinuity designs, we find that the policy caused a significant reduction in rapes and property crimes on the Washington side of the border in 2013-2014 relative to the Oregon side and relative to the pre-legalization years 2010-2012.
The legalization also increased consumption of marijuana and reduced consumption of other drugs and both ordinary and binge alcohol. Four possible mechanisms are discussed: the direct psychotropic effects of cannabis; substitution away from violence-inducing substances; reallocation of police effort; reduced role of criminals in the marijuana business
The Demand for Cigarettes as Derived from the Demand for Weight Control: A theoretical and empirical investigation
No full textThis paper offers an economic model of smoking and body weight and provides new empirical evidence on the extent to which the demand for cigarettes is derived from the demand for weight loss. In the model, smoking causes weight loss in addition to having direct utility benefits and direct health consequences. It predicts that some individuals smoke for weight loss and that the practice is more common among those who consider themselves overweight and those who experience greater disutility from excess weight.
We test these hypotheses using nationally representative data in which adolescents are directly asked whether they smoke to control their weight. We find that, among teenagers who smoke frequently, 46% of girls and 30% of boys are smoking in part to control their weight. As predicted by the model, this practice is significantly more common among those who describe themselves as too fat and among groups that tend to experience greater disutility from obesity.
We conclude by discussing the implications of these findings for tax policy; specifically, the demand for cigarettes is less
price elastic among those who smoke for weight loss, all else being equal. Public health efforts to reduce smoking initiation and encourage cessation may wish to design campaigns to alter the derived nature of cigarette demand, especially among adolescent girls
“The better you feel, the harder you fall”: Health perception biases and mental health among Chinese adults during the COVID-19 pandemic
Full text linkThe health risks of the current COVID-19 pandemic, together with the drastic mitigation measures taken in many affected nations, pose an obvious threat to public mental health. To assess predictors of poor mental health in the context of the COVID-19 pandemic, this study first implements survey-based measures of health perception biases among Chinese adults during the pandemic. Then, it analyzes their relation to three mental health outcomes: life satisfaction, happiness, and depression (as measured by the CES−D). We show that the health overconfidence displayed by approximately 30% of the survey respondents is a clear risk factor for mental health problems; it is a statistically significant predictor of depression and low levels of happiness and life satisfaction. We also document that these effects are stronger in regions that experienced higher numbers of confirmed COVID-19 cases and deaths. Our results offer clear guidelines for the implementation of effective interventions to temper health overconfidence, particularly in uncontrollable situations like the COVID-19 pandemic
Hamiltonian potential functions for differential games
No full textWe introduce the concept of Hamiltonian potential functions for noncooperative open-loop differential games and we characterise sufficient conditions for their existence. We identify a class of games admitting a Hamiltonian potential and illustrate the related properties of their dynamic structure. Then, we offer a preliminary exploration of the construction of potential functions for feedback games. As an illustration, we consider an asymmetric oligopoly game with process innovation
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