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Genetic testing with primary prevention and moral hazard


  • Bardey, David
  • De Donder, Philippe


We develop a model where a genetic test reveals whether an individual has a low or high probability of developing a disease. Testing is not mandatory, but agents have to reveal their test results to the insurers, facing a discrimination risk. A costly prevention effort allows agents with a genetic predisposition to decrease their probability to develop the disease. We study the individual decisions to take the test and to undertake the prevention effort as a function of the effort cost and of its efficiency. If effort is observable by insurers, agents undertake the test only if the effort cost is neither too large nor too small. If the effort cost is not observable by insurers, moral hazard increases the value of the test if the effort cost is low. We offer several policy recommendations, from the optimal breadth of the tests to policies to do away with the discrimination risk.

Suggested Citation

  • Bardey, David & De Donder, Philippe, 2013. "Genetic testing with primary prevention and moral hazard," Journal of Health Economics, Elsevier, vol. 32(5), pages 768-779.
  • Handle: RePEc:eee:jhecon:v:32:y:2013:i:5:p:768-779
    DOI: 10.1016/j.jhealeco.2013.04.008

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    References listed on IDEAS

    1. Hoy, Michael & Polborn, Mattias, 2000. "The value of genetic information in the life insurance market," Journal of Public Economics, Elsevier, vol. 78(3), pages 235-252, November.
    2. Francesca Barigozzi & Dominique Henriet, 2011. "Genetic Information: Comparing Alternative Regulatory Approaches When Prevention Matters," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(1), pages 23-46, February.
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    18. Steven Shavell, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 541-562.
    19. David Crainich, 2015. "Self-Insurance With Genetic Testing Tools," Post-Print hal-01533549, HAL.
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    Cited by:

    1. Goulão Catarina & Thibault Emmanuel, 2013. "Physical Activity and Policy Recommendations: A Social Multiplier Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 577-612, November.
    2. Simeon Schudy & Verena Utikal, 2015. "Does imperfect data privacy stop people from collecting personal health data?," TWI Research Paper Series 98, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    3. Filipova-Neumann, Lilia & Hoy, Michael, 2014. "Managing genetic tests, surveillance, and preventive medicine under a public health insurance system," Journal of Health Economics, Elsevier, vol. 34(C), pages 31-41.
    4. David Bardey & Philippe De Donder & Cesar Mantilla, 2014. "Adverse Selection vs Discrimination Risk with Genetic Testing. An Experimental Approach," CESifo Working Paper Series 5080, CESifo Group Munich.
    5. Bardey, David & De Donder, Philippe & Mantilla, Cesar, 2017. "How Is the Trade-off between Adverse Selection and Discrimination Risk Affected by Genetic Testing? : Theory and Experiment," TSE Working Papers 17-777, Toulouse School of Economics (TSE).
    6. Fernando Antoñanzas & Carmelo A. Juárez-Castelló & Roberto Rodríguez-Ibeas, 2016. "Implementing personalized medicine with asymmetric information on prevalence rates," Health Economics Review, Springer, vol. 6(1), pages 1-8, December.
    7. repec:eee:jhecon:v:55:y:2017:i:c:p:95-107 is not listed on IDEAS
    8. Christine Arentz, 2012. "Auswirkungen von Gentests in der Krankenversicherung," Otto-Wolff-Institut Discussion Paper Series 04/2012, Otto-Wolff-Institut für Wirtschaftsordnung, Köln, Deutschland.
    9. Simeon Schudy & Verena Utikal, 2012. "The Influence of (Im)perfect Data Privacy on the Acquisition of Personal Health Data," Working Paper Series of the Department of Economics, University of Konstanz 2012-12, Department of Economics, University of Konstanz.
    10. repec:bla:jrinsu:v:84:y:2017:i:1:p:73-94 is not listed on IDEAS
    11. Johan N.M. Lagerlöf & Christoph Schotmüller, 2013. "Monopoly Insurance with Endogenous Information," Discussion Papers 13-15, University of Copenhagen. Department of Economics.

    More about this item


    Discrimination risk; Informational value of test; Personalized medicine;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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