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Prudence and optimal prevention for health risks

  • Christophe Courbage

    (The Geneva Association, 53, route de malagnou, CH-1208 Geneva, Switzerland)

  • Béatrice Rey

    (Actuarial Institute of Lyon, University Claude Bernard, 50 avenue Tony Garnier, FR-69007 Lyon, France)

Registered author(s):

    Empirical evidence suggests the existence of a positive relationship between fear of sickness (FS) - as measured by the level of future utility lost when sickness occurs - and the level of effort to prevent the occurrence of sickness. By looking theoretically at this issue, we develop new results on the determinants of optimal prevention for health risks. In particular, we show that a sufficient condition to pursue more prevention for an individual with a higher FS than another is to have lower prudence in Kimball's (1990) sense, whatever the distribution of risk. These findings reinforce the role of prudence as a main determinant of the optimal level of prevention. Copyright © 2006 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.1138
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    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 15 (2006)
    Issue (Month): 12 ()
    Pages: 1323-1327

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    Handle: RePEc:wly:hlthec:v:15:y:2006:i:12:p:1323-1327
    Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Bruno Jullien & Bernard Salanié & François Salanié, 1998. "Should More Risk-Averse Agents Exert More Effort," Working Papers 98-12, Centre de Recherche en Economie et Statistique.
    2. Eeckhoudt, L. & Godfroid, Ph. & Gollier, C., 1997. "Willingness to pay, the risk premium and risk aversion," Economics Letters, Elsevier, vol. 55(3), pages 355-360, September.
    3. Boyer, M. & Dionne, G., 1988. "More On Insurance, Protection And Risk," Cahiers de recherche 8806, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    4. Dionne, G. & Eeckhoudt, L., 1984. "Self-Insurance, Self-Protection and Increased Risk Aversion," Cahiers de recherche 8424, Universite de Montreal, Departement de sciences economiques.
    5. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
    6. Courbage, Christophe, 1999. "Primes de risque et soins de santé," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(4), pages 665-672, décembre.
    7. Cook, Philip J & Graham, Daniel A, 1977. "The Demand for Insurance and Protection: The Case of Irreplaceable Commodities," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 143-56, February.
    8. L. Eeckhoudt & C. Gollier, 2005. "The impact of prudence on optimal prevention," Post-Print hal-00199781, HAL.
    9. Eeckhoudt, Louis & Schlesinger, Harris, 2009. "On the utility premium of Friedman and Savage," Economics Letters, Elsevier, vol. 105(1), pages 46-48, October.
    10. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
    11. Miles S. Kimball, 1989. "Precautionary Saving in the Small and in the Large," NBER Working Papers 2848, National Bureau of Economic Research, Inc.
    12. Bleichrodt, Han & Crainich, David & Eeckhoudt, Louis, 2003. "The effect of comorbidities on treatment decisions," Journal of Health Economics, Elsevier, vol. 22(5), pages 805-820, September.
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