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Multifactorial Genetic Disorders and Adverse Selection: Epidemiology Meets Economics

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  • Angus Macdonald
  • Pradip Tapadar

Abstract

The focus of genetics is shifting its contribution to common, complex disorders. New genetic risk factors will be discovered, which if undisclosed may allow adverse selection. However, this should happen only if low‐risk individuals would reduce their expected utility by insuring at the average price. We explore this boundary, focusing on critical illness insurance and heart attack risk. Adverse selection is, in many cases, impossible. Otherwise, it appears only for lower risk aversion and smaller insured losses, or if the genetic risk is implausibly high. We find no strong evidence that adverse selection from this source is a threat.

Suggested Citation

  • Angus Macdonald & Pradip Tapadar, 2010. "Multifactorial Genetic Disorders and Adverse Selection: Epidemiology Meets Economics," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 155-182, March.
    • Handle: RePEc:bla:jrinsu:v:77:y:2010:i:1:p:155-182
    DOI: 10.1111/j.1539-6975.2009.01342.x
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    References listed on IDEAS

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    Cited by:

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    2. Christine Arentz, 2012. "Auswirkungen von Gentests in der Krankenversicherung," Otto-Wolff-Institut Discussion Paper Series 04/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.

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