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ecision to immigrate involves risk and uncertainty. Consequently, immigrants are commonly perceived as risk takers. They have imperfect information on labour market characteristics including wages, unemployment benefits; opportunities to spend their leisure time; social mobility and the general environment in the destination country. They also have to give up of close relationship with family and friends they leave behind. Hence, a rational individual would decide to immigrate only if his or her willingness to take risks is significantly high (Akguc et al. 2015; Balaz & Williams, 2011). Immigrant population accounted for 13.5% of the total population in the United Kingdom (UK) in 2015 (Vargas-Silva & Rienzo, 2016). Specifically for Inner London, it accounted for striking 36.8% in 2015. The immigrant population is diverse withpeople coming from all over the world. The top three countries of origin are Poland, India and Pakistan (ONS, 2015; Vargas-Silva & Rienzo, 2016). They are followed by two European countries, i.e. Ireland and Germany. South Africa, Nigeria, Bangladesh and Romania comprise about 2% of immigrant population in the UK.
Despite a common stereotype, the majority of immigrants in the UK are women and not men. This fact is true since 1993 (Vargas-Silva & Rienzo, 2016). This makes the UK different from other developed coun- tries’ immigrant populations, e.g. Germany, where there is lower share of women in the immigrant population compared to the native popula- tion (Bonin et al., 2012). The most common reason to immigrate is work, with formal studies being the second most common (Blinder, 2016). The eligibility of immigrants for unemployment benefits, social housing and health care access is largely determined by whether a person comes from a member country of the EU1 or not. EU nationals classified as workers are eligible for the same welfare benefits (tax credits, housing benefits) as UK nationals. EU nationals, who are long-term UK residents, have free access to the National Health Service (NHS). They also have free access if their country of citizenship has reciprocal health care agreement with the UK. Such agreements are made with all European Economic Area (EEA) countries, which include all EU countries and, in addition, Iceland, Lichtenstein and Norway. Based on these differences it is likely that EU nationals have lower uncertainty when making decision to immigrate compared to non-EU nationals.
The eligibility for free access to the NHS used to be the same for non-EU nationals ordinarily resident in the UK. Department of Health estimated cost of services provided to immigrants and visitors in 2013. The total gross estimate was £2 billion a year, however it included EU nationals as well (The King’s Fund, 2015). The cost of so-called ’health
1The full list of member countries of the EU is available at:
https://europa.eu/ european-union/about-eu/countries_en
tourism’ was estimated between £60 and £80 million a year. In order to recover costs from visitors and immigrants, the NHS surcharge was introduced in April 2015. Now each non-EU national has to pay £200 per year2 together with his or her application for a long-term visa.
Immigrants also differ with respect to their health behaviours. They tend to use less health care services compared to native UK citizens (Jayaweera & Quingley, 2010; The King’s Fund, 2015). Immigrants in the UK report poorer general health but they are less likely to smoke and consume alcohol (Jayweera & Quingley, 2010). Immigrants living in London tend to engage in risky sexual behaviours more than native-born individuals (Burns et al., 2011). Hence, foreign-born individuals have different behaviours than native-born and some may incur high costs to the NHS.
The objective of this chapter is to explore general and domain-specific risk preferences as well as time preferences of immigrant population in the UK, and make a comparison with the native population. We also aim to investigate how immigrants’ engagement in risky health behaviours is different from that of native UK population and whether it can be explained by the difference in risk attitudes. Understanding the above differences in risk attitudes and health behaviours will contribute to the design of public health programmes targeted specifically towards the UK immigrant population. Such programmes could save future health care costs and well-being by promoting prevention and healthy lifestyle among immigrants.
We exploit the UK Household Longitudinal Study (UKHLS) Innovation Panel, which includes information on risk, time preferences and health behaviours, to answer the questions of interest. To our best knowledge, this is the first study comparing risk preferences of the UK native and immigrant population. The existing literature on native-migrant differ-
2Discounts apply to some categories of applicants. Full information is available at:
https: //www.gov.uk/healthcare-immigration-application/how-much-pay
ence in risk attitude is scarce and does not provide consistent results. The studies mainly focus on risks in general despite the recent empirical evidence on risk attitude being domain-specific. We benefit from a unique dataset that incorporates different risk measures and a wide profile of potentially risky health behaviours such as smoking, alcohol consumption and poor diet.
Risk preferences are elicited using two methods widely used in the literature: multiple price list method based on Holt & Laury (2002) and self-assessed scale-based questions based on Dohmen et al. (2011). Time preferences are elicited using multiple price list method based on Coller & Williams (1999). We apply interval regression models to study the effect of immigrant status on risk and time preferences. OLS and probit models are also estimated as robustness checks. Probit models are then used to study the association between risk or time preferences and health behaviours, which we allow to differ for immigrants and natives.
In line with the literature, we find that immigrants are more willing to take risks than natives. This is true for all risk measures except self- assessed risk in the financial domain. However, it is also important to distinguish by immigrants’ country of origin, length of stay in the UK and citizenship status. Non-EU immigrants are more willing to take risks than native UK citizens, whereas EU immigrants are more risk averse than natives. Immigrants, who did not get the UK citizenship, are less risk averse than natives, whereas immigrants, who are UK citizens, are more risk averse than natives. Those who spent more time in the UK and those who are UK citizens are more willing to take health risks than natives. Immigrants, who arrived recently, have lower discount rates than native individuals but this difference is attenuated with time spent in the UK.
We find that immigrants smoke more than natives, specifically immi- grants from the EU. Higher willingness to take health risks is associated with higher probability of smoking. Non-EU immigrants are less likely to
binge drink than native UK citizens. Immigrants, who arrived recently in the UK (after 2003), are more likely to eat fast food regularly but this probability is decreasing with time spent in the UK. High discount rate is associated with higher probability of smoking and eating fast food.
The paper is organised as follows. Section 2 provides a short review of literature. Section 3 describes the data and provides its descriptive analysis. Section 4 presents the empirical strategy, Section 5 presents the results before concluding in section 6.