Risk Preferences and Obesity: A Behavioral Economics Approach

Abstract

<p>Risk aversion has been shown to have a negative effect on adverse health behaviors such as smoking and heavy alcohol consumption. However, the significance and sign of the effect of risk aversion on the tendency to be obese has not been established in previous research. Additionally, the knowledge of specific health risks arising from obesity has been shown to have a significant negative effect on obesity, although the interaction between health risk awareness and risk aversion has not been studied. This paper fills this gap in the literature by studying the relationship between risk preferences, health risk knowledge and the occurrence of obesity within. In this paper, data from a nationally representative survey of adults in the United States is used to determine the significance of measures for both risk aversion and health risk knowledge on the likelihood of obesity, while controlling for the usual variables shown by previous research to be predictors for obesity. Risk aversion is found to have a positive and significant effect on obesity within the general population; however, this effect loses its significance within sub-populations who exhibit awareness of the health risk from obesity, as measured by two different proxy variables.</p>