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The treatment decision under uncertainty: The effects of health, wealth and the probability of death

Stefan Felder

Journal of Health Economics, 2020, vol. 69, issue C

Abstract: Medical treatment reduces diagnostic risk, increases therapeutic risk and lowers the probability of death. This paper analyzes the effects of initial health, wealth and the probability of death on the propensity to treat under diagnostic and therapeutic risk. It shows that treatment propensity increases with the probability of death, but can decrease with the severity of illness. The effect of wealth depends on the cross-derivative of the utility function with respect to health and wealth. These results have implications for treatment decisions at the end of life.

Keywords: Decision thresholds; Diagnostic risk; Therapeutic risk; End of life treatments (search for similar items in EconPapers)
JEL-codes: I12 I18 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:69:y:2020:i:c:s0167629618311330

DOI: 10.1016/j.jhealeco.2019.102253

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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