Motivated health risk denial and preventative health care investments.

07:00 EST 19th February 2019 | BioPortfolio

Summary of "Motivated health risk denial and preventative health care investments."

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 behavior and incentive to innovate. I also show that tax-funded prevention subsidies are welfare enhancing.


Journal Details

This article was published in the following journal.

Name: Journal of health economics
ISSN: 1879-1646
Pages: 78-92


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