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Risk aversion, time preference and health production: Theory and empirical evidence from Cambodia

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  • Rieger, Matthias

Abstract

This paper quantifies the relationship between risk aversion and discount rates on the one hand and height and weight on the other. It studies this link in the context of poor households in Cambodia. Evidence is based on an original dataset that contains both experimental measures of risk taking and impatience along with anthropometric measurements of children and adults. The aim of the paper is to (i) explore the importance of risk and time preferences in explaining undernutrition and (ii) compare the evidence stemming from poor households to strikingly similar findings from industrialized countries. It uses an inter-generational approach to explain observed correlations in adults and children that is inspired by the height premium on labor markets. Parents can invest in the health capital of their child to increase future earnings and their consumption when old: better nutrition during infancy translates into better human capital and better wages, and ultimately better financial means to take care of elderly parents. However this investment is subject to considerable uncertainty, since parents neither perfectly foresee economic conditions when the child starts earning nor fully observe the ability to transform nutritional investments into long-term health capital. As a result, risk taking households have taller and heavier children. Conversely, impatience does not affect child health. In the case of adults, only weight and the body mass index (BMI), but not height, are positively and moderately correlated with risk taking and impatience.

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  • Rieger, Matthias, 2015. "Risk aversion, time preference and health production: Theory and empirical evidence from Cambodia," Economics & Human Biology, Elsevier, vol. 17(C), pages 1-15.
    • Handle: RePEc:eee:ehbiol:v:17:y:2015:i:c:p:1-15
    DOI: 10.1016/j.ehb.2014.12.001
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    Cited by:

    1. Nielsen, Jytte Seested & Bech, Mickael & Christensen, Kaare & Kiil, Astrid & Hvidt, Niels Christian, 2017. "Risk aversion and religious behaviour: Analysis using a sample of Danish twins," Economics & Human Biology, Elsevier, vol. 26(C), pages 21-29.
    2. Bonan, Jacopo & LeMay-Boucher, Philippe & Scott, Douglas, 2022. "Can hypothetical measures of time preference predict actual and incentivised behaviour? Evidence from Senegal," World Development, Elsevier, vol. 159(C).
    3. Chiara Pastore & Stefanie Schurer & Agnieszka Tymula & Nicholas Fuller & Ian Caterson, 2023. "Economic preferences and obesity: Evidence from a clinical lab‐in‐field study," Health Economics, John Wiley & Sons, Ltd., vol. 32(9), pages 2147-2167, September.
    4. Wilson, Nicholas, 2018. "Altruism in preventive health behavior: At-scale evidence from the HIV/AIDS pandemic," Economics & Human Biology, Elsevier, vol. 30(C), pages 119-129.
    5. Pastore, Chiara & Schurer, Stefanie & Tymula, Agnieszka & Fuller, Nicholas & Caterson, Ian, 2020. "Economic Preferences and Obesity: Evidence from a Clinical Lab-in-Field Experiment," IZA Discussion Papers 13915, Institute of Labor Economics (IZA).
    6. Herberholz, Chantal, 2020. "Risk attitude, time preference and health behaviours in the Bangkok Metropolitan Area," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    7. Kang, Myong-Il & Ikeda, Shinsuke, 2016. "Time discounting, present biases, and health-related behaviors: Evidence from Japan," Economics & Human Biology, Elsevier, vol. 21(C), pages 122-136.

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    More about this item

    Keywords

    Child health; Height-for-age; Risk preferences; Time preferences; Cambodia;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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