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A fresh look at primary prevention for health risks

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  • Richard Peter

Abstract

The author analyzes how risk preferences affect primary prevention for health risks using Kihlstrom and Mirman (1974) transformation function approach. This ensures consistency of ordinal preferences. Higher risk aversion may increase or decrease optimal prevention depending on a probability threshold. Higher downside risk aversion always has a negative effect on optimal prevention. Our findings corroborate the role of downside risk aversion as an important determinant of optimal prevention for health risks but renders fear of sickness irrelevant. We also point out several unique properties of prevention for health risks compared to financial risks.

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  • Richard Peter, 2021. "A fresh look at primary prevention for health risks," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1247-1254, May.
    • Handle: RePEc:wly:hlthec:v:30:y:2021:i:5:p:1247-1254
    DOI: 10.1002/hec.4238
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    2. Wong, Kit Pong, 2022. "Diversification and risk attitudes toward two risks," Journal of Mathematical Economics, Elsevier, vol. 102(C).
    3. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, Maria Deni, 2023. "An Ounce of Prevention for a Pound of Cure: Efficiency of Community-Based Healthcare," IZA Discussion Papers 16350, Institute of Labor Economics (IZA).
    4. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, María Deni, 2024. "An Ounce of Prevention for a Pound of Cure: Basic Health Care and Efficiency in Health Systems," IDB Publications (Working Papers) 13433, Inter-American Development Bank.
    5. Christophe Courbage & Richard Peter, 2021. "On the effect of uncertainty on personal vaccination decisions," Health Economics, John Wiley & Sons, Ltd., vol. 30(11), pages 2937-2942, November.
    6. Richard Peter, 2024. "The economics of self-protection," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 6-35, March.
    7. Han Bleichrodt, 2022. "The prevention puzzle," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(2), pages 277-297, September.
    8. Peter, Richard, 2021. "Prevention as a Giffen good," Economics Letters, Elsevier, vol. 208(C).

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