Abstract - This paper uses the Behavioral Risk Factor Surveillance System (2001) data in conjunctions with Environmental Protection Agency data to investigate on how individual health habits, air outdoor pollution and diseases combine to affect the likelihood of good health status and the amount of health investments. The environment is a second-best world characterized by uncertainty on the level of health, in which individuals are not able to avoid health shocks completely.
Models are estimated using three different measures of overall health: a measure of self-assessed health and two health outcomes indicators (blood pressure and activity limitations due to health problems).
A multivariate probit approach is used to estimate recursive systems of equations for self-assessed health, health outcomes and lifestyles.