The Treatment Decision under Uncertainty: The Effects of Health, Wealth and the Probability of Death

Publication date: Available online 16 November 2019Source: Journal of Health EconomicsAuthor(s): Stefan FelderAbstractMedical 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.
Source: Journal of Health Economics - Category: Health Management Source Type: research