Genetic testing with primary prevention and moral hazard

Philippe De Donder and David Bardey

No 8977, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Discrimination risk; Informational value of test; Personalized medecine (search for similar items in EconPapers)
JEL-codes: D82 I18 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-cta and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Genetic testing with primary prevention and moral hazard (2013)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2012)
Working Paper: Genetic testing with primary prevention and moral hazard (2011)
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