Association for Public Policy Analysis & Management

Medical innovation can result in moral hazard by reducing the cost of unhealthy behavior. Moral hazard is of particular concern in the context of public health initiatives aimed at reducing teen fertility. For example, programs providing sexual education and free contraceptives have been opposed on the grounds that these programs will increase sexual activity in teens. I examine the behavioral response to one recent medical innovation: the Human Papillomavirus (HPV) vaccine. HPV is the most common sexually transmitted infection (STI) in the United States, and causes 27,000 new cases of cancer in the U.S. each year. The vaccine protects against the four strains of HPV most associated with symptomatic genital warts and cancer. Vaccination rates remain low partly because of parental concerns about moral hazard. I use both medical claims and survey data to observe a comprehensive set of variables indicating risky behavior. I use instrumental variables and regression discontinuity designs to account for selection into vaccination and to determine the causal effect of receiving the vaccine on behavior. I find evidence of heterogeneous treatment effects. Results indicate that receiving the vaccine leads to a reduction in risky behavior in my main specifications; however there is some evidence that the vaccine may lead to moral hazard in low income teens. This difference may be due to differences in productive or allocative efficiency in health production.