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Measuring Multivariate Risk Preferences in the Health Domain

Author

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  • Arthur Attema

    (Erasmus School of Economics - Erasmus University Rotterdam)

  • Olivier L’haridon

    () (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Gijs van de Kuilen

    (TiSEM - Tilburg School of Economics and Management - Tilburg University [Netherlands])

Abstract

We investigate univariate and multivariate risk preferences for health (longevity) and wealth. We measure attitudes toward correlation and attitudes toward higher order dependence structures such as cross-prudence and cross-temperance, making use of the risk apportionment technique proposed by Eeckhoudt et al. (2007). For multivariate gains, we find correlation aversion and cross-prudence in longevity and wealth. For losses, we observe correlation seeking and cross-imprudence. We do not find clear evidence for cross-temperance. Our results indicate that longevity and wealth are considered to be substitutes for gains, but not for losses. Second, univariate (higher order) risk preferences are comparable for longevity and wealth, although somewhat closer to linearity for wealth. Third, we find evidence that attitudes toward dependence structures in the health domain are sign-dependent.

Suggested Citation

  • Arthur Attema & Olivier L’haridon & Gijs van de Kuilen, 2019. "Measuring Multivariate Risk Preferences in the Health Domain," Post-Print halshs-01970236, HAL.
  • Handle: RePEc:hal:journl:halshs-01970236
    DOI: 10.1016/j.jhealeco.2018.12.004
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01970236
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    Cited by:

    1. Felder, Stefan, 2020. "The treatment decision under uncertainty: The effects of health, wealth and the probability of death," Journal of Health Economics, Elsevier, vol. 69(C).
    2. Henri Loubergé & Yannick Malevergne & Béatrice Rey, 2019. "New Results for Additive and Multiplicative Risk Apportionment," Working Papers 1915, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Mayrhofer, Thomas & Schmitz, Hendrik, 2020. "Prudence and prevention: Empirical evidence," Ruhr Economic Papers 863, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Thomas Mayrhofer & Hendrik Schmitz, 2020. "Prudence and prevention - Empirical evidence," Working Papers CIE 134, Paderborn University, CIE Center for International Economics.

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    Keywords

    multivariate risk attitudes; health; prudence; temperance;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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