Possible topic#2 - Risk Preference, Time Preference and Health-related Decisions

Second attempt. So the motivations are:

• Developing countries have lower quality of health: lower life expectancy, higher infant (and adult) mortality rate, etc. Is it because of supply constraint (availability of public services)? Household budget constraint? Or because people value ‘good health’ less?
• Budget constraints causes households or individuals highly prefers today’s income than long-term human capital investment (high discount rate). This could lead to fewer amount of HH budget allocated for own and/or children’s health
• Lower valuation of future health means individuals would engage in riskier health behavior, such as smoking, less exercise, bad dietary habit, not having health insurance
• Policy relevance: a) if risk and time preference do explain less investment on health and riskier behavior, then policies that promote changes in behavior/valuation will be relevant, b) otherwise, improving income/well-being will be the more relevant approach.

Fortunately, new set of questions in IFLS-4 enables to do the analysis of individual's risk preference and discount rate. Discount rate could me measured using questions on whether the respondent prefers a lower amount of money now or a higher amount one year (five years) later. Risk preference coefficients can be calculated from hypothetical questions of a choice between a job that guarantees a certain amount of lifetime income, and another job that gives the individual a 50-50 chance of a getting a higher or lower amount than the previous one.

Once the discount rate is constructed, I can use it as one of the explanatory variables for parent's (mother's) investment in their children's health. The underlying hypothesis is higher discount rate explains lower investment in health.

There will be two main groups of individuals to analyze. The first one is pregnant women. The particular variables to analyze are: 1) number of months of elapsed pregnancy before going to the health service, 2) smoking behavior during pregnancy, and 3) utilization/number of visits to health service during pregnancy. The second group will be children aged 5-15 years, whose variables of interest are their immunization record (completion, delays), utilization of health services and anthropometric measures.

Risk preference coefficient will be used to analyze individual's health-related risky decisions. Focusing on adults, the variables of interests are smoking habit, utilization of preventive health care, access to health insurance, Body Mass Index (a proxy for health status, which is the outcome of behavior, and possibly eating habit. The underlying hypothesis is that higher individual's risk preference lead to riskier health behavior.

Update: supervisor kind of like this idea. She thought this is an interesting topic. One concern is whether I could get enough variations in the data to lead to something. We'll see.