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Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease


  • Emily Oster
  • Ira Shoulson
  • E. Ray Dorsey


We use novel data to study the decision to undergo genetic testing by individuals at risk for Huntington disease (HD), a hereditary neurological disorder that reduces healthy life expectancy to about age 50. Although genetic testing is perfectly predictive and carries little financial or time cost, less than 10 percent of at-risk individuals are tested prior to the onset of symptoms. Testing rates are higher for individuals with higher ex ante risk of carrying the genetic expansion for HD. Untested individuals express optimistic beliefs about their probability of having HD and make fertility, savings, labor supply, and other decisions as if they do not have HD, even though individuals with confirmed HD behave quite differently. We show that these facts are qualitatively consistent with a model of optimal expectations (Brunnermeier and Parker, 2005) and can be reconciled quantitatively in this model with reasonable parameter values. This model nests the neoclassical framework and, we argue, provides strong evidence rejecting the assumptions of that framework. Finally, we briefly develop policy implications.

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  • Emily Oster & Ira Shoulson & E. Ray Dorsey, 2011. "Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease," NBER Working Papers 17629, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17629
    Note: HC HE LS

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    References listed on IDEAS

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    Cited by:

    1. G. Gopalakrishna, 2017. "Robust test of Long Run Risk and Valuation risk model," Working Papers wp1107, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Marianne Andries & Valentin Haddad, 2017. "Information Aversion," NBER Working Papers 23958, National Bureau of Economic Research, Inc.
    3. Schünemann, Johannes & Strulik, Holger & Trimborn, Timo, 2017. "Going from bad to worse: Adaptation to poor health health spending, longevity, and the value of life," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 130-146.
    4. Murtin, Fabrice & Boarini, Romina & Cordoba, Juan Carlos & Ripoll, Marla, 2017. "Beyond GDP: Is there a law of one shadow price?," European Economic Review, Elsevier, vol. 100(C), pages 390-411.
    5. David Huffman & Raimond Maurer & Olivia S. Mitchell, 2016. "Time Discounting and Economic Decision-making among the Elderly," Working Papers wp347, University of Michigan, Michigan Retirement Research Center.
    6. Botond Köszegi, 2014. "Behavioral Contract Theory," Journal of Economic Literature, American Economic Association, vol. 52(4), pages 1075-1118, December.
    7. Linda Thunström & Jonas Nordström & Jason F. Shogren & Mariah Ehmke & Klaas Veld, 2016. "Strategic self-ignorance," Journal of Risk and Uncertainty, Springer, vol. 52(2), pages 117-136, April.
    8. Amalia R. Miller & Catherine Tucker, 2017. "Frontiers of Health Policy: Digital Data and Personalized Medicine," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 49-75.
    9. Huck, Steffen & Szech, Nora & Wenner, Lukas M., 2017. "More effort with less pay: On information avoidance, optimistic beliefs, and performance," Discussion Papers, Research Unit: Economics of Change SP II 2015-304r2, Social Science Research Center Berlin (WZB).
    10. Baird, Sarah & Gong, Erick & McIntosh, Craig & Özler, Berk, 2014. "The heterogeneous effects of HIV testing," Journal of Health Economics, Elsevier, vol. 37(C), pages 98-112.
    11. Jouini, Elyès & Napp, Clotilde, 2015. "Subjective expectations and medical testing," Economics Letters, Elsevier, vol. 135(C), pages 39-41.
    12. Russell Golman & David Hagmann & George Loewenstein, 2017. "Information Avoidance," Journal of Economic Literature, American Economic Association, vol. 55(1), pages 96-135, March.
    13. Michael Hoy & Richard Peter & Andreas Richter, 2014. "Take-up for genetic tests and ambiguity," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 111-133, April.
    14. Laura Derksen & Adamson Muula & Joep van Oosterhout, 2016. "Love in the Time of HIV: Testing as a Signal of Risk," Natural Field Experiments 00550, The Field Experiments Website.
    15. Ashraf, Nava & Bandiera, Oriana & Lee, Scott S., 2014. "Awards unbundled: Evidence from a natural field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 100(C), pages 44-63.
    16. Coutts, Alexander, 2015. "Testing Models of Belief Bias: An Experiment," MPRA Paper 67507, University Library of Munich, Germany.
    17. Chater, Nick & Loewenstein, George, 2016. "The under-appreciated drive for sense-making," Journal of Economic Behavior & Organization, Elsevier, vol. 126(PB), pages 137-154.
    18. Zanella, Giulio & Banerjee, Ritesh, 2016. "Experiencing breast cancer at the workplace," Journal of Public Economics, Elsevier, vol. 134(C), pages 53-66.
    19. Thornton, Rebecca L., 2012. "HIV testing, subjective beliefs and economic behavior," Journal of Development Economics, Elsevier, vol. 99(2), pages 300-313.
    20. Emily Oster & Ira Shoulson & E. Ray Dorsey, 2016. "Optimal Expectations and Limited Medical Testing: Evidence from Huntington Disease: Corrigendum," American Economic Review, American Economic Association, vol. 106(6), pages 1562-1565, June.
    21. Au, Pak Hung, 2016. "Price reaction and disagreement over public signal," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 81-106.
    22. Jason Abaluck & Leila Agha & Christopher Kabrhel & Ali Raja & Arjun Venkatesh, 2014. "Negative Tests and the Efficiency of Medical Care: What Determines Heterogeneity in Imaging Behavior?," NBER Working Papers 19956, National Bureau of Economic Research, Inc.
    23. Schweizer, Nikolaus & Szech, Nora, 2016. "Optimal revelation of life-changing information," Working Paper Series in Economics 90, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
    24. Nikolaus Schweizer & Nora Szech, 2016. "Optimal Revelation of Life-Changing Information," CESifo Working Paper Series 5941, CESifo Group Munich.

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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