Ex-ante Moral Hazard: Evidence from the Behavioral Risk Factor and Surveillance System Dataset

Abstract

Ex-ante moral hazard may induce individuals with health insurance to engage in riskier behaviors than they would without insurance. This paper uses data from the Behavioral Risk Factor Surveillance System (2011- 2018) to identify the existence of the ex-ante moral hazard. We estimate the effects of health insurance on four lifestyle choices: overweight, obesity, smoking, and sedentary using a multivariate probit model. The results show that having insurance is associated with a higher probability of a sedentary lifestyle. Health insurance also increases the probability of being overweight. However, health insurance has no significant incentive effect on being obese implying that people are not obese because of health insurance. The findings also show that health insurance is associated with a decrease in the probability of smoking. This indicates the existence of potential ex-ante moral hazard in two lifestyle choices, sedentary lifestyle and overweight, but not in obesity and smoking.