Motivated health risk denial and preventative health care investments

Schwardmann, Peter (Mai 2017): Motivated health risk denial and preventative health care investments. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2017-13

Abstract

People deny health risks, invest too little in disease prevention, and are highly sensitive to the price of preventative health care, especially in developing countries. Moreover, private sector R&D spending on developing-country diseases is almost non-existent. To explain these empirical observations, I propose a model of motivated belief formation, in which an agent’s decision to engage in health risk denial balances the psychological benefits of reduced anxiety with the physical cost of underprevention. I use the model to study firms’ price-setting behaviour and incentive to innovate. I also show that tax-funded prevention subsidies are welfare enhancing.

• Dokumententyp: Paper
• Keywords: health risk denial, optimal expectations, motivated beliefs, disease prevention, self-protection
• Fakultät: Volkswirtschaft > Munich Discussion Papers in Economics > Mikroökonomik ; Volkswirtschaft > Munich Discussion Papers in Economics > Verhaltenswissenschaftliche Ökonomik
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: D03, I15, I11, I18
• Sprache: Englisch

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