How Diagnostic Tests Affect Prevention: a Cost-Benefit Analysis
AbstractThe 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 InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 53.
Date of creation: 01 Feb 2001
Date of revision:
prevention; diagnostic tests;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-11-05 (All new papers)
- NEP-HEA-2001-11-05 (Health Economics)
- NEP-MIC-2001-11-05 (Microeconomics)
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