The value of disease prevention vs treatment

Hammitt, James K., Herrera Araujo, Daniel Andres and Rheinberger, Christoph (2016) The value of disease prevention vs treatment. Journal of Health Economics, 50. pp. 247-255.

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Official URL: http://tse-fr.eu/pub/31394

Abstract

We present an integrated valuation model for diseases that are life-threatening. The model extends the standard one-period value-per-statistical-life model to three health prospects: healthy, ill, and dead. We derive willingness-to-pay values for prevention efforts that reduce a disease's incidence rate as well as for treatments that lower the corresponding health deterioration and mortality rates. We find that the demand value of prevention always exceeds that of treatment. People often overweight small risks and underweight large ones. We use the rank dependent utility framework to explore how the demand for prevention and treatment alters when people evaluate probabilities in a non-linear manner. For incidence and mortality rates associated with common types of cancers, the inverse-S shaped probability weighting found in experimental studies leads to a significant increase in the demand values of both treatment and prevention.

Item Type: Article
Language: English
Date: December 2016
Refereed: Yes
Uncontrolled Keywords: Health risk valuation, Chronic disease, Willingness-to-pay, Probability weighting, Value of prevention
JEL codes: D11 - Consumer Economics - Theory
D81 - Criteria for Decision-Making under Risk and Uncertainty
I10 - General
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 24 Jan 2017 10:34
Last Modified: 26 Mar 2018 08:46
OAI ID: oai:tse-fr.eu:31394
URI: http://publications.ut-capitole.fr/id/eprint/22767

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