■ 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 (Bi ) can be
modeled as a function of income, prices, and health status (Hi) which, as defined in the
theoretical model, is determined by one’s behaviors, awareness of a health condition (ηi ) 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) Mi =ξZi + εi,
where Xiis a vector of exogenous explanatory variables that relate to individual behavioral
choices,ηi indicates whether or not an individual has a specific health condition, M i indicates
whether or not an individual takes medication for this condition andZi 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 ei,εi are random disturbance terms. An estimation
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