Genetic testing with primary prevention and moral hazard

Bardey, David and De Donder, Philippe (2013) Genetic testing with primary prevention and moral hazard. Journal of Health Economics, 32 (n°5). pp. 768-779.

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Official URL: http://tse-fr.eu/pub/27176

Abstract

We develop a model where a genetic test reveals whether an individual has a low or high probability of developing a disease. A costly prevention effort allows high-risk agents to decrease this probability. Agents are not obliged to take the test, but must disclose its results to insurers, and taking the test is associated to a discrimination risk. We study the individual decisions to take the test and to undertake the prevention effort as a function of the effort cost and of its efficiency. If effort is observable by insurers, agents undertake the test only if the effort cost is neither too large nor too low. If the effort cost is not observable by insurers, moral hazard increases the value of the test if the effort cost is low. We offer several policy recommendations, from the optimal breadth of the tests to policies to do away with the discrimination risk.

Item Type: Article
Language: English
Date: September 2013
Refereed: Yes
JEL codes: D82 - Asymmetric and Private Information
I18 - Government Policy; Regulation; Public Health
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:35
Last Modified: 09 Apr 2018 08:42
OAI ID: oai:tse-fr.eu:27176
URI: http://publications.ut-capitole.fr/id/eprint/15611

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