An Ounce of Prevention or a Pound of Cure? The Value of Health Risk Information
Individuals infer their health risk from experiences of people around them, particularly family. I assess how household health events affect this learning. When someone is diagnosed with a chronic condition, their family members increase healthcare spending by 10%. Informational spillovers lead to higher utilization of both high- and low-return care; responses align with individuals reassessing health risks given new information. To evaluate welfare implications, I estimate a structural decision-making model where individuals learn about risk from family. Results reveal consumers over-respond to diagnoses, over-weighting their risks ex-post and crowding out potential welfare gains from information for almost half of individuals.
Online appendices are contained in separate files, accessible here.
- Appendix A: Notes on Data Cleaning
- Appendix B: Additional Reduced-Form Estimation Results
- Appendix C: Notes on the Structural Model
- Appendix D: Additional Structural Estimation Results
Recommended citation: Hoagland, A. (2024). An Ounce of Prevention or a Pound of Cure? The Value of Health Risk Information. Working Paper.