Smoking

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Employers Pushing Healthier Living

August 8, 2011 in Employee Benefits, Health Insurance | 3 comments

“This isn’t about big brother telling people what to do,” says John Rice, GE’s vice-chairman, “but helping them make better choices.”

The Economist reviews large employers efforts to improve employee health and thus decrease their own health care costs.  Some of these efforts include:

  • Prohibiting smoking on company premises
  • Handing our healthy recipes
  • Building on-site gym
  • Bonuses for healthier living

Take these examples from Fortune 500 companies:
“At IBM, employees receive a $150 bonus for exercising, eating nutritious meals and so on. One such bonus is designed not just for an employee but for his entire family. According to IBM’s own data, caring for a diabetic child is six times costlier than caring for a healthy one.”

Kevin Volpp, the director of the Centre for Health Incentives at the University of Pennsylvania, found that GE’s anti-smoking incentives prompted 9.4% of smokers to remain smoke-free after 18 months. Without incentives, only 3.6% of those who tried to quit succeeded. A review published in Health Affairs last year found that firms saved $3.27 for every dollar they spent on health programmes.”

Is this a good thing? Health insurance should account for random health risks. Health risks due to individual employee behavioral choices, however, should be internalized by the individual. Since the premium prices are basically the same (free) for most employees in large firms, they have a smaller incentive to maintain a healthy behavior than would be the case if employers used individual underwriting in pricing policies. Thus, efforts to give bonuses for healthier behavior by employees and their families is, in essence, an effort to increase net premiums for those who do not engage in healthy behaviors. With health care costs consuming a larger and larger portion of employer’s budgets, these efforts to control costs will be increasingly important over time.

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Smoking’s Impact on Longevity across the World

June 3, 2010 in Public Health | 3 comments

One measure of longevity that may better reflect the quality of a medical care in a country is life expectancy at age 50.  According to a recent article in the Penn SAS Magazine (p. 16-p.17) life expectancy in the U.S. for non-smokers is 84.9 for females and 81.2 for males.  These figures rank 7th and 9th among all developed nations.

Longevity for smokers is significantly shorter.  In the U.S., the longevity is 82.3 for females and 78.5 for men.  These figures rank 17th and 14th among developed nations.

The observation that the life expectancy for smokers is shorter is not surprising.  However, why does the U.S. rank so much worse for life expectancy for smokers than non-smokers?  Is the U.S. medical treatment for smokers so much worse than that of other developed countries?  I would guess not.

The likely cause of the ranking change is due to the selection of people into the smoking group.  It many be the case that smokers in the U.S., are poorer, less educated and more likely to be obese than non-smokers.  Thus, because the group of smokers is at a socioeconomic disadvantage, this can explain why the U.S. longevity ranking is lower for smokers than non-smokers.

Many people stereotype that in France, smoking may be more respectable in high class society and smoking may not be as concentrated in poorer individuals.  In fact, we observe that France ranks 4th in female life expectancy for non-smokers but 3rd in female life expectancy for smokers.  A similar phenomenon may exist in Spain; the life expectancy for non-smoking females ranks 11th, but the life expectancy  for smokers is 5th in the world.  However, these trends are not as strong for differences in male life expectancy between smokers and non-smokers.

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Vice

May 22, 2009 in Public Health | No comments

Economic Inquiry has some interesting articles on the vices of drinking and smoking:

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Risk aversion and health behaviors

December 5, 2008 in Experimental | No comments

Are risk averse individuals less likely to engage in unhealthy behaviors?  According to Anderson and Mellor (JHE 2008), the answer is yes.  Using a Holt and Laury (AER 2002) methodology to measure risk aversion, the authors find that individuals who are risk averse are less likely to smoke, drink, be overweight or drive over the speed limit.  Risk averse individuals are more likely to use a seat belt.

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Does more education improve your health?

November 10, 2008 in Labor Economics | No comments

A recent JHE article by Park and Kang wonder if more education induces people to have a healthier lifestyle.  They use data on Korean men to see if this is the case.  They find that “an increase in education induces individuals to exercise regularly, and to get regular health checkups…[but]…education has little effect on smoking or drinking.”

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De gustibus non est disputandum

April 7, 2008 in Economics - General, Public Policy | Permalink

Eric Crampton argues against the paternalistic view some economists have taken in a recent editorial in Health Economics. Here’s an excerpt:

“Of course, most economists would disagree vehemently [that taxing unhealthy behaviors is a good thing]. Raising taxes does tend to reduce consumption and, where consumption generates large negative externalities (costs borne by uninvolved parties) can even be efficient: Pigovean taxes (taxes proportionate to those external costs) can push us closer to socially-optimal outcomes. But, there is no inefficiency caused by people choosing to live lifestyles they view as preferable despite the health costs.

If I decide to enjoy a shorter life rather than eek out a miserable existence without wonderfully-marbled steaks, a beer or several, or even the occasional cigar, zero inefficiency is induced thereby.

…what evidence there is suggests that to the extent smoking induces a “fiscal externality,” the sign of the effect is wrong: smokers pay more in cigarette taxes than they ever cost the public purse. They die earlier of cheaper diseases and collect less in superannuation than do non-smokers. And, as a 10% increase in cigarette taxes correlates with a 2% increase in obesity, one wonders whether increased cigarette taxes consequently require further increases in taxes on fatty foods.

Crampton supports the idea of “De gustibus non est disputandum,” we should not criticize individuals’ preferences.

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Can poverty improve health?

October 11, 2007 in Academic Articles, Medical Studies | Permalink

A recent paper by Franco et al. (2007) claims that increased poverty may improve health (see also NPR’s Marketplace report). How is this possible? Lower income reduces excess food as well as cigarette consumption.  Further, poverty makes public transportation less affordable and individuals may substitute walking for taking the bus.  The authors study Cuba’s experience between 1989 and 2005.

Cuba has been subjected to an economic embargo by the United States since the 1960s. After the loss of the Soviet Union as a trading partner in 1989, Cuba entered a prolonged economic crisis known as the ‘‘Special Period.’’ The crisis worsened continuously over the next 5 years, with economic output reaching a nadir in 1995 of about half the level in 1990.

The decreased economic activity lead to the following changes:

  • Calorie intake: “Average per capita daily energy intake…declined from 2,899 kcal in 1988 to 1,863 kcal in 1993.”
  • Physical Activity: “In 1987, only 30 percent of the population living in Havana was characterized as physically active. In national data, approximately 70 percent of Cubans were considered physically active in 1991–1995, and 67 percent were active in 2001″
  • Obesity: The prevalences of obesity in Havana were 11.9 percent, 5.4 percent, and 9.3 percent in 1982, 1994, and 1998, respectively. In Cienfuegos, prevalences were 14.3 percent, 7.2 percent, and 12.1 percent in 1990, 1995, and 2001, respectively, reflecting a 49 percent fall during the economic crisis.”
  • Cigarette smoking: Cigarette smoking decreased over this period as well.

We see that the prevalence of many of risk factors declined during the “Special Period.”  What were the affects on health?

  • “In subsequent years (1997–2002), rates of mortality from type 2 diabetes, coronary heart disease, and all causes dropped 51 percent, 35 percent, and 18 percent, respectively…No significant changes in total cancer mortality were observed, consistent with the current knowledge that obesity is not strongly associated with this condition.”

So poverty is the answer?  It turns out that all the news is not rosy:

  • All-cause mortality among persons over the age of 65 years increased 13 percent from 1989 to 1996, primarily because of excess deaths from infections (21). The secular decline in infant mortality was interrupted for 3 years, and the incidence of low birth weight increased from 7.3 percent to 9.0 percent between 1989 and 1993 (21). An epidemic of optical and peripheral neuropathy attributed in part to vitamin and protein deficiencies affected 50,000 people between 1992 and 1993.”

Can these results be extended to other countries? Cuba is a communist country where health is provided publicly.  The government can incur debt in order to provide medical care for its citizens.  In the U.S., increased poverty will likely make medical care less affordable–for those not on Medicaid–and thus health outcomes may suffer.  Further, long run economic decline will make the provision of even government-run high quality medical care unaffordable for a society.  A final critique is that although the data presented in the paper is suggestive, correlation does not imply causation.  One should always maintain a healthy skepticism regarding the conclusion of time-series correlation studies.While no economist would advocate for policy-makers to attempt to increase poverty, the Franco study may guide individuals into believing that “less is more,” at least when it comes to food intake and car usage.

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