PRIORITY SETTING IN HEALTH CARE: DISENTANGLING RISK AVERSION FROM INEQUALITY AVERSION

• Published in: Health economics Vol. 22; no. 6; pp. 730 - 740
• Main Authors: Echazu, Luciana, Nocetti, Diego
• Format: Journal Article
• Language: English
• Published: England Blackwell Publishing Ltd 01.06.2013; Wiley Periodicals Inc
• Subjects: Attitude; Attitudes; budget allocation; Expected utility; Health care; Health Care Rationing - economics; Health economics; Health inequalities; Health Priorities - economics; health uncertainty; Humans; Inequalities; inequality aversion; Medical treatment; Models, Economic; Resource allocation; Risk; Risk aversion; Severity of Illness Index; Social Welfare - economics; social welfare function; Socioeconomic Factors; Specification; Studies; Uncertainty; Welfare economics
• ISSN: 1057-9230; 1099-1050
• DOI: 10.1002/hec.2858

ABSTRACT In this paper, we introduce a tractable social welfare function that is rich enough to disentangle attitudes towards risk in health outcomes from attitudes towards health inequalities across individuals. Given this preference specification, we evaluate how the introduction of uncertainty over the severity of illness and over the effectiveness of treatments affects the optimal allocation of healthcare resources. We show that the way in which uncertainty affects the optimal allocation within our proposed specification may differ sharply from that in the standard expected utility framework. Copyright © 2012 John Wiley & Sons, Ltd.