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An Ounce of Prevention

Author

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  • Joseph P. Newhouse

Abstract

I look at prevention through an economic lens and make three main points. First, those advocating preventive measures are often asked how much money a given measure saves. This question is misguided. Rather, preventive measures can be thought of as insurance, with a certain cost in the present that may or may not pay off in the future. In fact, although most medical preventive measures improve expected health, they do not save money. Various lifestyle and early childhood interventions, however, may both save money and improve health. Second, preventive measures, including medical and lifestyle measures, are heterogeneous in their value, both across measures and within measure, across individuals. As a result, generalizations in everyday discourse about the value of prevention can be overly broad. Third, health insurance coverage for medical preventive measures should generally be more extensive than coverage for the treatment of a medical condition, though full coverage of preventive services is not necessarily optimal.

Suggested Citation

  • Joseph P. Newhouse, 2021. "An Ounce of Prevention," Journal of Economic Perspectives, American Economic Association, vol. 35(2), pages 101-118, Spring.
    • Handle: RePEc:aea:jecper:v:35:y:2021:i:2:p:101-18
    DOI: 10.1257/jep.35.2.101
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    Citations

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    Cited by:

    1. Richard Peter, 2024. "The economics of self-protection," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 49(1), pages 6-35, March.
    2. Bauer, Daniel & Lakdawalla, Darius & Reif, Julian, 2025. "Health risk and the value of life," Journal of Public Economics, Elsevier, vol. 245(C).
    3. Han Bleichrodt, 2022. "The prevention puzzle," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(2), pages 277-297, September.
    4. Stanislao Maldonado & Deborah Martinez & Lina Diaz, 2024. "Building a shield together: Addressing low vaccine uptake against cancer through social norms," Working Papers 202, Peruvian Economic Association.
    5. Hae Kang Lee, 2024. "The financial benefits of health engagement programs to life insurers," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-38, December.
    6. Herrera-Almanza, Catalina & Rosales-Rueda, Maria F., 2023. "Community-based health programs and child vaccinations: Evidence from Madagascar," World Development, Elsevier, vol. 170(C).
    7. Brammli-Greenberg, Shuli & Hovav, Boaz, 2024. "Unmet needs and the effect of healthcare system generosity on prevention activity – A multilevel analysis," Social Science & Medicine, Elsevier, vol. 340(C).
    8. Dugord, Clara & Franc, Carine, 2022. "Trajectories and individual determinants of regular cancer screening use over a long period based on data from the French E3N cohort," Social Science & Medicine, Elsevier, vol. 294(C).
    9. Nguyen, Lan & Connelly, Luke B. & Birch, Stephen & Nguyen, Ha Trong, 2025. "Origins and developmental paths of medical conditions from mid-childhood to mid-adolescence in Australia: The early-life adverse conditions and lasting effects," GLO Discussion Paper Series 1579, Global Labor Organization (GLO).

    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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