Economic Rationality, Health Behaviors and Health Status

Crucial decisions about health and health care depend on an ability to make choices that are consistent with a person’s own objectives. However, little is known about how economic rationality (or consistency in decision-making) relates to health decisions. This study is among the first to examine the relationship between economic rationality measured by decision-making quality and health behaviors/status including smoking, alcohol consumption, diet, obesity and self-reported health. Specifically, we call decisions high quality if choices are consistent with maximizing a well-defined utility function.

To measure decision-making quality, we conducted an online experiment on a sample of over 2,000 adults from the Longitudinal Internet Studies for the Social Sciences (LISS) panel, a representative sample of Dutch households. In the experiment, subjects were presented with a sequence of decision problems: selection of a bundle of commodities from a standard budget set. The choice of a bundle under a budget constraint provides more information about preferences than a typical discrete choice. We then constructed Afriat’s Critical Cost Efficiency Index (CCEI) (1972) derived from classical revealed preference analysis for each individual subject from their choices. CCEI is a continuous score from 0 to 1 and measures how consistent subjects are in making decisions.

Next, we examine the relationship between experimentally measured economic rationality and various health-related outcomes including smoking, daily alcohol consumption, eating vegetables, flu vaccination, self-reported health status, obesity and three chronic conditions: diabetes, high cholesterol or high blood pressure. These outcomes are chosen because they are likely reflective of individual decision-making. The regressions controlled for an extensive set of individual characteristics including demographics, education, income, occupation, IQ score and BIG FIVE personality measures. The outcome and control variables are available in existing LISS survey data.

We find that, conditioning on covariates, our rationality measure significantly and negatively predicts the probability that an individual ever smoked, is currently smoking and is obese: an increase of one standard deviation in the rationality measure predicts a decrease of 4.6%, 11.7% and 15% in these outcomes respectively relative to the sample mean, and significantly and positively predicts the probability of eating vegetables at least five times a week (3.5% increase relative to the mean). We do not find a significant relationship between rationality and daily alcohol consumption, flu vaccination in the past year, self-reported health and chronic conditions after controls are added.

Individuals who are more rational, that is, better at making consistent decisions appear better at adhering to some healthy behaviors that potentially led to more favorable health outcomes, especially those that are more in the control of the individual and dependent on accumulative decision-making over an extended period of time (such as smoking and obesity). Our findings potentially explain the heterogeneity in health among individuals with similar socioeconomic status.