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Genetic testing and repulsion from chance

Author

Listed:
  • Hoel, Michael

    (Dept. of Economics, University of Oslo)

  • Iversen, Tor

    (Department of Health Management and Health Economics, University of Oslo, Rikshospitalet,)

  • Nilssen, Tore

    (Dept. of Economics, University of Oslo)

  • Vislie, Jon

    (Dept. of Economics, University of Oslo)

Abstract

A central theme in the international debate on genetic testing concerns the extent to which insurance companies should be allowed to use genetic information in their design of insurance contracts. We analyze this issue within a model with the following important feature: A person’s well-being depends on the perceived probability of becoming ill in the future in a way that varies among individuals. We show that both tested high-risks and untested individuals are equally well off whether or not test results can be used by insurers. Individuals who test for being low-risks, on the other hand, are made worse off by not being able to verify this to insurers. This implies that verifiability dominates nonverifiability in an ex-ante sense.

Suggested Citation

  • Hoel, Michael & Iversen, Tor & Nilssen, Tore & Vislie, Jon, 2003. "Genetic testing and repulsion from chance," Memorandum 20/2003, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2003_020
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Genetic testing; asymmetric information; insurance;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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