Efficient Self-Protection and Progress in Curing-Technology
AbstractThe direct medical costs associated with obesity, smoking, and other non-healthy habits are estimated to account for more than 20% of U.S. health spending. Hence, poor health choices induce significant aggregate shift in spending away from treating competing?non preventable?medical risks and from nonmedical consumption. Such a shift in spending distorts relative incentives to innovate in different sectors, through market-size effect. As consumers fail to internalize these aggregate-level externalities, private-prevention is generally inefficient. We show that private prevention is insufficient compared with social optimum, unless technological opportunities to develop cures for preventable diseases are sufficiently superior. Furthermore, under multiple preventable-risks, prevention efforts are biased in favor of the risk with higher potential for curing advances.
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Bibliographic InfoPaper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2013-07.
Date of creation: Apr 2013
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Self-Protection; Efficient Prevention; Medical Innovation;
Find related papers by JEL classification:
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-05 (All new papers)
- NEP-HEA-2013-05-05 (Health Economics)
- NEP-INO-2013-05-05 (Innovation)
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