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Prevention and cure efforts both substitute and complement

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  • David A. Hennessy

    (Department of Economics and Center for Agricultural and Rural Development, Iowa State University, Ames, IA, USA)

Abstract

Suppose one could expend effort to prevent probabilistic transition to an adverse state, and also effort to expedite probabilistic transition to a beneficial state. Bearing in mind that the efforts occur in different states, should these efforts substitute or complement? Two appealing arguments are in conflict. If cure effort is costly, then the incentive to prevent should be high in order to avoid future cure effort costs, i.e. efforts are gross substitutes in demand. If prevention effort is costly, then the incentive to cure should be low since recidivism is likely, i.e. efforts complement. In a lifetime present value model, we show that both arguments have merit. We also show that the prevalence of the adverse state can rise with a subsidy on cure effort costs. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • David A. Hennessy, 2008. "Prevention and cure efforts both substitute and complement," Health Economics, John Wiley & Sons, Ltd., vol. 17(4), pages 503-511.
  • Handle: RePEc:wly:hlthec:v:17:y:2008:i:4:p:503-511
    DOI: 10.1002/hec.1270
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    References listed on IDEAS

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    1. J. Williams & Rosalie Liccardo Pacula & Frank J. Chaloupka & Henry Wechsler, 2004. "Alcohol and marijuana use among college students: economic complements or substitutes?," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 825-843.
    2. Meier, Volker, 2000. "On the demand for preventive care," Munich Reprints in Economics 19191, University of Munich, Department of Economics.
    3. Louis Eeckhoudt & Christian Gollier, 2005. "The impact of prudence on optimal prevention," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(4), pages 989-994, November.
    4. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    5. Hey, John D. & Patel, Mahesh S., 1983. "Prevention and cure? : Or: Is an ounce of prevention worth a pound of cure?," Journal of Health Economics, Elsevier, vol. 2(2), pages 119-138, August.
    6. Gerald Nordquist & S. Y. Wu, 1976. "The Joint Demand for Health Insurance and Preventive Medicine," NBER Chapters,in: The Role of Health Insurance in the Health Services Sector, pages 35-72 National Bureau of Economic Research, Inc.
    7. Tomas J. Philipson & William H. Dow & Xavier Sala-i-Martin, 1999. "Longevity Complementarities under Competing Risks," American Economic Review, American Economic Association, vol. 89(5), pages 1358-1371, December.
    8. 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 623-648, July-Aug..
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    Cited by:

    1. Wang, Tong, 2012. "Essays on the Economics of Disease, with Particular Reference to Livestock," ISU General Staff Papers 201201010800003982, Iowa State University, Department of Economics.
    2. Bate, Andrew M. & Jones, Glyn & Kleczkowski, Adam & MacLeod, Alan & Naylor, Rebecca & Timmis, Jon & Touza, Julia & White, Piran C.L., 2016. "Modelling the impact and control of an infectious disease in a plant nursery with infected plant material inputs," Ecological Modelling, Elsevier, vol. 334(C), pages 27-43.
    3. Mario Menegatti, 2014. "Optimal choice on prevention and cure: a new economic analysis," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 363-372, May.

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