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Health risk factors

Although it might seem illogical, one can talk about the production of health, where an individual uses several inputs to obtain an output: health.

Personal hygiene, education level, good nutrition, environmental conditions are also inputs in the health production that may have a greater marginal productivity in terms of health than a continuous raise in health care expenditure.

Health spending continue to rise faster than economic growth in most OECD countries, maintaining a trend observed since the 1970s. While governments must do more to get better value for money from healthcare spending, they must also continue pursuing their long-term goals of having more equitable, responsive and efficient health systems, according to the OECD.[1] 

But, are we already facing decreasing marginal returns to health? One claim is that individuals might be changing their behaviour since they take for granted that they have easy access to medical care and more access to medical care whether in quantity or in diversity. A good insurance coverage can lead to a pure moral hazard effect (less prevention) due to good coverage.

Because of this, individuals will end up adopting less attention to their health. [2]Among the several health risk factors one can highlight: obesity, tobacco consumption and alcohol consumption.

The prevention of illness can have associated costs (eg:one hour at work vs one hour at the gym).  

Certain diseases, like some chronic diseases, are often associated to particular lyfestyles i.e. smoking, obesity, excess alcohol consumption. Social conditions might drive lifestyle choices (the education environment, the business environment, or the labour market).[3] This is a matter of behavioural economics. Behavioural research shows that the assumption of rationality of the agents involved in market transactions does not always reflect the behaviours of those agents.


Preventive interventions by Governments aim at changing potential harmful lifestyles (we can think of this as correcting market failures). Recent examples are the ban of tobacco consumption in closed public spaces, high taxes on tobacco among many others. Thus, do Governments have a paternalistic attitude towards population? Or, is the main purpose of these measures reduce potential costs that Governments would have to face in the future, because of its role of insurer (in exchange of taxes, it has to deal with the financial burden of health expenditures), since for example tobacco consumption and obesity are relative to cardiac diseases? Either way, if this measures work, they may work in this two ways: reduce expenditure in health care and improve people’s lifestyles.

[2] Barros, Pedro Pita; Economia da Saúde – Conceitos e comportamentos





Health: spending continues to outpace economic growth in most OECD countries


Barros, Pedro Pita; Economia da Saúde – Conceitos e comportamentos


Healthy choices




Sofia Gonçalves


Author: studentnovasbe

Master student in Nova Sbe

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