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Prudence and prevention – empirical evidence

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  • Mayrhofer, Thomas
  • Schmitz, Hendrik

Abstract

Theory shows that optimal prevention decisions in the sense of self-protection (i. e., primary prevention) depend not only on the level of (second-order) risk aversion but also on prudence (third-order risk aversion). We use a unique dataset that combines data on higher-order risk preferences and observed real-world preventive behavior and provide the first representative evidence of a negative relationship between prudence and self-protection: We find that prudent individuals in the high-risk group (above the age of 60 or chronically ill) indeed invest less in self-protection as measured by influenza vaccination. This does not hold for younger and healthy individuals for whom influenza vaccination rates are low in general.

Suggested Citation

  • Mayrhofer, Thomas & Schmitz, Hendrik, 2025. "Prudence and prevention – empirical evidence," Economics Letters, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:ecolet:v:257:y:2025:i:c:s0165176525005087
    DOI: 10.1016/j.econlet.2025.112671
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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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