Explorations of the Effect of Experience on Preferences: Two Health-Care Case Studies
The standard assumption in economic theory is that preferences are stable. In particular, they are not changed as a result of experience with the good/service/event. Behavioral scientists have challenged this assumption and claimed (providing evidence) that preferences are constantly changing when experience is accumulated. This paper tests the effect of experience on preferences for attributes of health-care events. We are using two very different samples and a methodology that facilitates the estimation of marginal utilities of various attributes of a composite non-traded health-care service. Discrete Choice Experimental design is employed for the analysis of samples of (1) women who gave birth, and (2) women who were diagnosed with breast cancer. For each group we had information on experience. In the case of women who gave birth, the sample was decomposed into 3 sub-samples: pregnant women with their first child (no experience); women after one delivery (single experience); and mothers after more than one delivery (multiple experience). Preferences of the 3 sub-groups have then been compared. The breast cancer patients reported the number of chemotherapy/radiation treatments they have already received, thus enabling the construction of an experience variable and testing for the effect of experience on preferences. The basic finding is that preferences for health-care attributes are significantly changed as a result of experience with the health event. However, the amount of experience is irrelevant.
|Date of creation:||Apr 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Constantinides, George M, 1990.
"Habit Formation: A Resolution of the Equity Premium Puzzle,"
Journal of Political Economy,
University of Chicago Press, vol. 98(3), pages 519-43, June.
- G. Constantinides, 1990. "Habit formation: a resolution of the equity premium puzzle," Levine's Working Paper Archive 1397, David K. Levine.
- Matthew Rabin, 1998.
"Psychology and Economics,"
Journal of Economic Literature,
American Economic Association, vol. 36(1), pages 11-46, March.
- Matthew Rabin., 1997. "Psychology and Economics," Economics Working Papers 97-251, University of California at Berkeley.
- Rabin, Matthew, 1997. "Psychology and Economics," Department of Economics, Working Paper Series qt8jd5z5j2, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Victor R. Fuchs, 1978. "The Supply of Surgeons and the Demand for Operations," NBER Working Papers 0236, National Bureau of Economic Research, Inc.
- Pollak, Robert A., 1976. "Habit formation and long-run utility functions," Journal of Economic Theory, Elsevier, vol. 13(2), pages 272-297, October.
- G. Salkeld & M. Ryan & L. Short, 2000. "The veil of experience: do consumers prefer what they know best?," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 267-270.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
- Mandy Ryan & Cristina Ubach, 2003. "Testing for an experience endowment effect in health care," Applied Economics Letters, Taylor & Francis Journals, vol. 10(7), pages 407-410.
- Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
- Michael Grossman, 1973.
"The Correlation Between Health and Schooling,"
NBER Working Papers
0022, National Bureau of Economic Research, Inc.
- Michael Grossman, 1981.
"Government and Health Outcomes,"
NBER Working Papers
0780, National Bureau of Economic Research, Inc.
- Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages S251-78, October.
- San Miguel, Fernando & Ryan, Mandy & Scott, Anthony, 2002. "Are preferences stable? The case of health care," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 1-14, May.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:5659. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.