Estimating the Impact of Medication on Diabetics' Diet and Lifestyle Choices

■ There is a negative relationship between the being made aware of a health condition, such
as diabetes, and specific behaviors, such as choosing to eat an unhealthful diet or being
physically inactive;

■ There is a positive relationship between taking medication for a health condition and these
same behaviors; and

■ The effect of medication on increasing behaviors may offset the reductive effect of better
health awareness.

The theoretical model suggests that an individual’s chosen level of behaviors (B_i ) can be
modeled as a function of income, prices, and health status (H_i) which, as defined in the
theoretical model, is determined by one’s behaviors, awareness of a health condition (η_i ) and
whether or not one takes prescribed medication ( M _i ). This specification illuminates the
simultaneous nature of behavioral choices, medication and health status. For simplicity (and data
availability) we use a static framework. In reality, these decisions are more dynamic; past food
and behavioral choices influence our current health status, which in turn influence our future
choices regarding food, behaviors and medication. The empirical model can be written as:
(3a) Bi=β'Xi+δηi+φMi+ei

(3b) M_i =ξZ_i + ε_i,

where X_iis a vector of exogenous explanatory variables that relate to individual behavioral
choices,η_i indicates whether or not an individual has a specific health condition, M _i indicates
whether or not an individual takes medication for this condition andZ_i is a vector of exogenous
explanatory variables relating to whether or not an individual chooses to manage his or her
health condition through medication, and e_i,ε_i are random disturbance terms. An estimation

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