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Health Prevention and Savings: How to Deal with Fatalism?

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  • Johanna Etner
  • Meglena Jeleva

Abstract

In this paper, we first analyze the trade-off between primary prevention and savings when individuals face health (long-term care) risk. We suppose that there is no private insurance market for this risk and consider two risk management tools: primary prevention and savings. We emphasize the role of risk perception and, more precisely, we focus our discussion on the existence of a type of individuals that we call fatalists. Secondly, we analyze the role of risk perception on long-term care public policy. We propose to combine subsidies for prevention with a social insurance co-payment for long-term care expenditures. We show that the presence of fatalists is crucial in the optimal policy design.

Suggested Citation

  • Johanna Etner & Meglena Jeleva, 2016. "Health Prevention and Savings: How to Deal with Fatalism?," Annals of Economics and Statistics, GENES, issue 121-122, pages 67-90.
  • Handle: RePEc:adr:anecst:y:2016:i:121-122:p:67-90 DOI: 10.15609/annaeconstat2009.121-122.67
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    File URL: http://www.jstor.org/stable/10.15609/annaeconstat2009.121-122.67
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    References listed on IDEAS

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    1. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, December.
    2. Mohring, Herbert & Boyd, J Hayden, 1971. "Analysing 'Externalities': 'Direct Interaction' vs 'Asset Utilization' Frameworks," Economica, London School of Economics and Political Science, vol. 38(152), pages 347-361, November.
    3. Albert Breton, 1974. "The economic theory of representative government: A reply," Public Choice, Springer, vol. 20(1), pages 129-133, December.
    4. Oakland, William H., 1972. "Congestion, public goods and welfare," Journal of Public Economics, Elsevier, pages 339-357.
    5. Holtermann, S E, 1972. "Externalities and Public Goods," Economica, London School of Economics and Political Science, vol. 39(153), pages 78-87, February.
    6. Agnar Sandmo, 1973. "Public Goods and the Technology of Consumption," Review of Economic Studies, Oxford University Press, vol. 40(4), pages 517-528.
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    Cited by:

    1. Éric Langlais, 2010. "Les criminels aiment-ils le risque ?," Revue économique, Presses de Sciences-Po, vol. 61(2), pages 263-280.

    More about this item

    Keywords

    Health Risk; Primary Prevention; Long Term Care; Savings.;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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