Standard Efficiency-based Rationales

Insufficient and Asymmetric Information

There are typically good reasons to believe that markets fail to produce optimal outcomes because of informational problems. Two key features of insufficient and asymmetric information are relevant in the context of chronic NCDs: insufficient awareness of the health risks involved in consumption choices.

Inadequate information about the addictive qualities of unhealthy goods. The former potentially applies to all unhealthy behaviors, while the latter is more relevant to smoking and alcohol consumption than to diet and physical inactivity (see Cawley [1999+ for a treatment of the “addictive” aspects of diet).

Empirical findings as to whether individuals are well informed appear mixed, even in high-income countries.30 Yet it is not hard to imagine that knowledge about the health consequences of “poor health habits” increases as countries’ living standards and general levels of education rise. Hence, one would expect that in South Asia (as in comparable low- and middle-income countries) the relevant health knowledge is still fairly limited.

In China, where about 70 percent of adult men smoke, there is clear evidence that many people lack even basic information about the hazards of smoking. A 1996 survey of Chinese adults revealed that half of smokers—and half of nonsmokers—believed that there was little harm in smoking (Chinese Academy of Preventive Medicine 1997). Less work has assessed whether low risk awareness is a predictor of obesity.

The evidence, which is largely from high-income countries, suggests that such awareness is low compared to that of smoking.31 On the whole, government intervention in the form of the provision (and production) of NCD-related health information (e.g. on the health consequences of smoking) is in principle justifiable, as information is a public good and will therefore generally be undersupplied relative to the social optimum.

This includes the role for government to engage in research about the health consequences of unhealthy behavior. The provision of information in itself, though, is unlikely to be a very effective driver of behavior change.