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Explorations of the Effect of Experience on Preferences: Two Health-Care Case Studies

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Author Info
Einat Neuman (Academic College of Tel Aviv-Yaffo)
Shoshana Neuman () (Bar-Ilan University, CEPR and IZA Bonn)

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Abstract

The standard assumption in economic theory is that preferences are stable. In particular, they are not changed as a result of experience with the good/service/event. Behavioral scientists have challenged this assumption and claimed (providing evidence) that preferences are constantly changing when experience is accumulated. This paper tests the effect of experience on preferences for attributes of health-care events. We are using two very different samples and a methodology that facilitates the estimation of marginal utilities of various attributes of a composite non-traded health-care service. Discrete Choice Experimental design is employed for the analysis of samples of (1) women who gave birth, and (2) women who were diagnosed with breast cancer. For each group we had information on experience. In the case of women who gave birth, the sample was decomposed into 3 sub-samples: pregnant women with their first child (no experience); women after one delivery (single experience); and mothers after more than one delivery (multiple experience). Preferences of the 3 sub-groups have then been compared. The breast cancer patients reported the number of chemotherapy/radiation treatments they have already received, thus enabling the construction of an experience variable and testing for the effect of experience on preferences. The basic finding is that preferences for health-care attributes are significantly changed as a result of experience with the health event. However, the amount of experience is irrelevant.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2028.

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Length: 30 pages
Date of creation: Mar 2006
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Handle: RePEc:iza:izadps:dp2028

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Related research
Keywords: preferences; experience; Discrete Choice Experiment; health-care; delivery; breast cancer;

Other versions of this item:

Find related papers by JEL classification:
D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
I19 - Health, Education, and Welfare - - Health - - - Other

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  7. Mandy Ryan & Cristina Ubach, 2003. "Testing for an experience endowment effect in health care," Applied Economics Letters, Taylor and Francis Journals, vol. 10(7), pages 407-410, May. [Downloadable!] (restricted)
  8. Pollak, Robert A., 1976. "Habit formation and long-run utility functions," Journal of Economic Theory, Elsevier, vol. 13(2), pages 272-297, October. [Downloadable!] (restricted)
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  10. Michael Grossman, 1973. "The Correlation Between Health and Schooling," NBER Working Papers 0022, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. G. Salkeld & M. Ryan & L. Short, 2000. "The veil of experience: do consumers prefer what they know best?," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 267-270.
  12. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-43, June. [Downloadable!] (restricted)
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