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Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease

Author

Listed:
  • Emily Oster
  • Ira Shoulson
  • E. Ray Dorsey

Abstract

We use novel data to study genetic testing among individuals at risk for Huntington disease (HD), a hereditary disease with limited life expectancy. Although genetic testing is perfectly predictive and carries little economic cost, presymptomatic testing is rare. Testing rates increase with increases in ex ante risk of having HD. Untested individuals express optimistic beliefs about their health and make decisions (e.g., retirement) as if they do not have HD, even though individuals with confirmed HD behave differently. We suggest that these facts can be reconciled by an optimal expectations model (Brunnermeier and Parker 2005). (JEL D84, I12)

Suggested Citation

  • Emily Oster & Ira Shoulson & E. Ray Dorsey, 2013. "Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease," American Economic Review, American Economic Association, vol. 103(2), pages 804-830, April.
  • Handle: RePEc:aea:aecrev:v:103:y:2013:i:2:p:804-30 Note: DOI: 10.1257/aer.103.2.804
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    References listed on IDEAS

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    1. Andrew Caplin & John Leahy, 2001. "Psychological Expected Utility Theory and Anticipatory Feelings," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 55-79.
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    3. Rebecca L. Thornton, 2008. "The Demand for, and Impact of, Learning HIV Status," American Economic Review, American Economic Association, pages 1829-1863.
    4. Guy Mayraz, 2011. "Priors and Desires," CEP Discussion Papers dp1047, Centre for Economic Performance, LSE.
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    Citations

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    Cited by:

    1. Thornton, Rebecca L., 2012. "HIV testing, subjective beliefs and economic behavior," Journal of Development Economics, Elsevier, pages 300-313.
    2. Amalia R. Miller & Catherine Tucker, 2017. "Frontiers of Health Policy: Digital Data and Personalized Medicine," Innovation Policy and the Economy, University of Chicago Press, pages 49-75.
    3. Laura Derksen & Adamson Muula & Joep van Oosterhout, 2016. "Love in the Time of HIV: Testing as a Signal of Risk," Natural Field Experiments 00550, The Field Experiments Website.
    4. Huck, Steffen & Szech, Nora & Wenner, Lukas M., 2017. "More effort with less pay: On information avoidance, optimistic beliefs, and performance," Discussion Papers, Research Unit: Economics of Change SP II 2015-304r2, Social Science Research Center Berlin (WZB).
    5. G. Gopalakrishna, 2017. "Robust test of Long Run Risk and Valuation risk model," Working Papers wp1107, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Ashraf, Nava & Bandiera, Oriana & Lee, Scott S., 2014. "Awards unbundled: Evidence from a natural field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 44-63.
    7. Schweizer, Nikolaus & Szech, Nora, 2016. "Optimal revelation of life-changing information," Working Paper Series in Economics 90, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    8. Zanella, Giulio & Banerjee, Ritesh, 2016. "Experiencing breast cancer at the workplace," Journal of Public Economics, Elsevier, pages 53-66.
    9. repec:eee:jeborg:v:140:y:2017:i:c:p:130-146 is not listed on IDEAS
    10. Emily Oster & Ira Shoulson & E. Ray Dorsey, 2016. "Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease: Corrigendum," American Economic Review, American Economic Association, pages 1562-1565.
    11. Linda Thunström & Jonas Nordström & Jason F. Shogren & Mariah Ehmke & Klaas Veld, 2016. "Strategic self-ignorance," Journal of Risk and Uncertainty, Springer, vol. 52(2), pages 117-136, April.
    12. Marianne Andries & Valentin Haddad, 2017. "Information Aversion," NBER Working Papers 23958, National Bureau of Economic Research, Inc.
    13. Murtin, Fabrice & Boarini, Romina & Cordoba, Juan Carlos & Ripoll, Marla, 2017. "Beyond GDP: Is there a law of one shadow price?," European Economic Review, Elsevier, vol. 100(C), pages 390-411.
    14. Au, Pak Hung, 2016. "Price reaction and disagreement over public signal," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 81-106.
    15. Michael Hoy & Richard Peter & Andreas Richter, 2014. "Take-up for genetic tests and ambiguity," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 111-133, April.
    16. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "Going from bad to worse: Adaptation to poor health health spending, longevity, and the value of life," Journal of Economic Behavior & Organization, Elsevier, pages 130-146.
    17. Jason Abaluck & Leila Agha & Christopher Kabrhel & Ali Raja & Arjun Venkatesh, 2014. "Negative Tests and the Efficiency of Medical Care: What Determines Heterogeneity in Imaging Behavior?," NBER Working Papers 19956, National Bureau of Economic Research, Inc.
    18. Chater, Nick & Loewenstein, George, 2016. "The under-appreciated drive for sense-making," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 137-154.
    19. Baird, Sarah & Gong, Erick & McIntosh, Craig & Özler, Berk, 2014. "The heterogeneous effects of HIV testing," Journal of Health Economics, Elsevier, pages 98-112.
    20. David Huffman & Raimond Maurer & Olivia S. Mitchell, 2016. "Time Discounting and Economic Decision-making among the Elderly," Working Papers wp347, University of Michigan, Michigan Retirement Research Center.
    21. Coutts, Alexander, 2015. "Testing Models of Belief Bias: An Experiment," MPRA Paper 67507, University Library of Munich, Germany.
    22. Botond Köszegi, 2014. "Behavioral Contract Theory," Journal of Economic Literature, American Economic Association, pages 1075-1118.
    23. Jouini, Elyès & Napp, Clotilde, 2015. "Subjective expectations and medical testing," Economics Letters, Elsevier, vol. 135(C), pages 39-41.
    24. Nikolaus Schweizer & Nora Szech, 2016. "Optimal Revelation of Life-Changing Information," CESifo Working Paper Series 5941, CESifo Group Munich.
    25. Russell Golman & David Hagmann & George Loewenstein, 2017. "Information Avoidance," Journal of Economic Literature, American Economic Association, pages 96-135.

    More about this item

    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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