Prudence and prevention - Empirical evidence*
Thomas Mayrhofer () and
Hendrik Schmitz ()
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Thomas Mayrhofer: Stralsund University of Applied Sciences, Harvard Medical School
No 134, Working Papers CIE from Paderborn University, CIE Center for International Economics
Theoretical papers show that optimal prevention decisions in the sense of self-protection (i.e., primary prevention) depend not only on the level of (second-order) risk aversion but also on higher-order risk preferences such as prudence (third-order risk aversion). We study empirically whether these theoretical results hold and whether prudent individuals show less preventive (self-protection) effort than non-prudent individuals. We use a unique dataset that combines data on higher-order risk preferences and various measures of observed real-world prevention behavior. We find that prudent individuals indeed invest less in self-protection as measured by influenza vaccination. This result is driven by high risk individuals such as individuals >60 years of age or chronically ill. We do not find a clear empirical relationship between risk-preferences and prevention in the sense of self-insurance (i.e. secondary prevention). Neither risk aversion nor prudence is related to cancer screenings such as mammograms, Pap smears or X-rays of the lung.
Keywords: prudence; risk preferences; prevention; vaccination; screening (search for similar items in EconPapers)
JEL-codes: D12 D81 I12 (search for similar items in EconPapers)
Pages: 24 pages
New Economics Papers: this item is included in nep-rmg and nep-upt
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Working Paper: Prudence and prevention: Empirical evidence (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pdn:ciepap:134
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