The Effect of Poverty on Health Behavior:

The effect of objective and subjective poverty on health behavior is examined, in the context of the 'bandwidth' effect (Mullainathan & Shafir, 2013) and the decision framework by (Sheehy-Skeffington & Haushofer, 2014). A thorough analysis is performed in a Cross-European setting using the SHARE dataset. The threshold set for objective poverty is proven to be unreliable and inconsistent in describing differences in health behavior. A search for a more optimal threshold shows further randomization in the context of health behavior. Objective poverty has no effect on health behavior, where subjective poverty is found to significantly influence smoking. A severity of subjective poverty analysis further shows localization of the effects. Ultimately cognitive functioning linked to the ‘bandwidth’ effect is significantly lower for people in subjective poverty. Combining these effects displays proof that in the European population subjective poverty influences decision making in the context of health behavior, while also declining cognitive functioning. Implying the possibility of a ‘bandwidth’ effect.