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How Diagnostic Tests Affect Prevention: a Cost-Benefit Analysis

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Abstract

The purpose of this paper is to offers insight for evaluating research and development in diagnostic tests. We show that a rational policy maker perfectly informed about health risks may choose to reduce investment in prevention when efficient diagnostic tests become available. We show that prevention and diagnostic tests are substitutes rather than complements. As a result the regular improvements in diagnostic technology that are observed can justify a lower investment on prevention at any given unitary price for this activity. The analysis is a useful tool for the allocation of funding between diagnostic and preventive medicine.

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Bibliographic Info

Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 53.

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Date of creation: 01 Feb 2001
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Handle: RePEc:sef:csefwp:53

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Keywords: prevention; diagnostic tests;

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  1. Eeckhoudt, Louis R. & Lebrun, Thérèse C. & Sailly, Jean-Claude L., 1984. "The informative content of diagnostic tests: An economic analysis," Social Science & Medicine, Elsevier, vol. 18(10), pages 873-880, January.
  2. Dionne, G. & Eeckhoudt, L., 1984. "Self-Insurance, Self-Protection and Increased Risk Aversion," Cahiers de recherche 8424, Universite de Montreal, Departement de sciences economiques.
  3. Dardanoni, Valentino & Wagstaff, Adam, 1987. "Uncertainty, inequalities in health and the demand for health," Journal of Health Economics, Elsevier, vol. 6(4), pages 283-290, December.
  4. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  5. Selden, Thomas M., 1993. "Uncertainty and health care spending by the poor: The health capital model revisited," Journal of Health Economics, Elsevier, vol. 12(1), pages 109-115, April.
  6. Chang, Fwu-Ranq, 1996. "Uncertainty and investment in health," Journal of Health Economics, Elsevier, vol. 15(3), pages 369-376, June.
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Cited by:
  1. Stéphane Mechoulan, 2006. "Risky Sexual Behavior, Testing and New HIV Treatments," Working Papers tecipa-239, University of Toronto, Department of Economics.

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