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Priority setting in health care and higher order degree change in risk


  • Courbage, Christophe
  • Rey, Béatrice


This paper examines how priority setting in health care expenditures is influenced by the presence of uncertainty about the severity of the illness and the effectiveness of medical treatment. We provide necessary and sufficient conditions on social preferences under which a social planner will allocate more health care resources to populations at higher risk. Changes in risk are defined by the concept of stochastic dominance up to order n. The shape of the social utility function and an equity weighting function are used to model the inequality aversion of the social planner. We show that for higher order risk changes, the usual conditions on preferences such as prudence or relative risk aversion are not necessarily required to prioritise health care when there are different levels of uncertainty associated with otherwise similar patient groups.

Suggested Citation

  • Courbage, Christophe & Rey, Béatrice, 2012. "Priority setting in health care and higher order degree change in risk," Journal of Health Economics, Elsevier, vol. 31(3), pages 484-489.
  • Handle: RePEc:eee:jhecon:v:31:y:2012:i:3:p:484-489
    DOI: 10.1016/j.jhealeco.2012.03.004

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    References listed on IDEAS

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    Cited by:

    1. Elyès Jouini & Clotilde Napp & Diego Nocetti, 2013. "Economic consequences of Nth-degree risk increases and Nth-degree risk attitudes," Journal of Risk and Uncertainty, Springer, vol. 47(2), pages 199-224, October.
    2. Berger, Loïc & Bleichrodt, Han & Eeckhoudt, Louis, 2013. "Treatment decisions under ambiguity," Journal of Health Economics, Elsevier, vol. 32(3), pages 559-569.
    3. Menegatti, Mario, 2015. "New results on high-order risk changes," European Journal of Operational Research, Elsevier, vol. 243(2), pages 678-681.

    More about this item


    Priority setting; Stochastic dominance; Health care; Inequality aversion;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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