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When Risk Perception Gets in the Way: Probability Weighting and Underprevention

Author

Listed:
  • Aurélien Baillon

    (EM - EMLyon Business School, GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Han Bleichrodt
  • Aysil Emirmahmutoglu
  • Johannes Jaspersen
  • Richard Peter

    (University of Iowa)

Abstract

Prevention efforts, such as quitting smoking, flu vaccination, and exercising, are of crucial importance in health policy, but people tend to undertake too few of them. The main reason is that most prevention efforts only reduce but do not completely eliminate the risk of poor health. This makes it harder for people to assess the benefits of prevention, because they tend to misperceive and transform probabilities. In "When Risk Perception Gets in the Way: Probability Weighting and Underprevention," Baillon et al. introduce psychological insights (probability weighting) in a model of optimal decision making and show that most people undertake too little prevention when the risk of poor health is between 10% and 80%. The paper discusses several policy measures to make people spend more on prevention.

Suggested Citation

  • Aurélien Baillon & Han Bleichrodt & Aysil Emirmahmutoglu & Johannes Jaspersen & Richard Peter, 2022. "When Risk Perception Gets in the Way: Probability Weighting and Underprevention," Post-Print halshs-03908478, HAL.
    • Handle: RePEc:hal:journl:halshs-03908478
    DOI: 10.1287/opre.2019.1910
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    Cited by:

    1. Jan Gaska, 2023. "Losses from Fluvial Floods in Poland over the 21st Century – Estimation Using the Productivity Costs Method," Economics of Disasters and Climate Change, Springer, vol. 7(3), pages 357-383, November.
    2. Emmanuelle Augeraud-Véron & Marc Leandri, 2024. "Optimal self-protection and health risk perceptions: Exploring connections between risk theory and the Health Belief Model," Post-Print hal-04557076, HAL.
    3. Yu Gao & Zhenxing Huang & Ning Liu & Jia Yang, 2024. "Are physicians rational under ambiguity?," Journal of Risk and Uncertainty, Springer, vol. 68(2), pages 183-203, April.
    4. Emmanuelle Augeraud-Véron & Marc Leandri, 2023. "Optimal self-protection and health risk perception: bridging the gap between risk theory and the Health Belief Model," EconomiX Working Papers 2023-12, University of Paris Nanterre, EconomiX.
    5. Emmanuelle Augeraud‐Véron & Marc Leandri, 2024. "Optimal self‐protection and health risk perceptions: Exploring connections between risk theory and the Health Belief Model," Health Economics, John Wiley & Sons, Ltd., vol. 33(7), pages 1565-1583, July.
    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.

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