Good health is both an input into one’s ability to generate income and an end in itself. As such, it is not surprising that a relatively vast literature is devoted to understanding the determinants of health behaviors. This literature has recently expanded to the study of health behaviors in low-income settings, for which good data are becoming increasingly available. This review is too short to be exhaustive, but it tries to present the most compelling evidence to date on this issue. The important thing to take away from this review is that when it comes to health behavior in developing countries, there are a substantial number of deviations from the neoclassical model. First of all, people seem to lack basic information, and sometimes have limited ability to process information, because of low education levels. Second, there are market imperfections and frictions, especially credit constraints, affecting people’s ability to invest in health. Finally, there seem to be some deviations from the rational model, with, as has been widely shown in developed countries, a nontrivial share of people exhibiting time-inconsistent preferences as well as myopia.
Overall, this suggests an important role for public policy when it comes to health. Above we identify four important demand-side policy tools: information, mandates, price subsidies, and financial incentives. All appear to have the potential to increase the sustained adoption of preventive behavior. But the success of these demand-side strategies is contingent on the supply side being adequate: on health services and products being available, with delivery and/or enforcement institutions that are effective. The issue of how to improve service delivery in health is outside the scope of this review, but it has been the focus of a number of recent and ongoing studies that will soon need a review of their own.