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In sickness but not in wealth: field evidence on patients’risk preferences in the financial and health domain

Galizzi, Matteo M., Miraldo, Marisa and Stavropoulou, Charitini (2013) In sickness but not in wealth: field evidence on patients’risk preferences in the financial and health domain. Discussion Paper (2013/8). Imperial College London, Business School, London, UK.

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Abstract

We conduct a field experiment to assess whether risk preferences significantly differ across the health and financial domains when they are elicited through the same paired-lotteries method. We administrate the Holt and Laury (2002) multiple price list (MPL) experimental tests to a sample of 300 patients attending outpatients’ clinics in a university hospital in Athens, during the Greek financial crisis. Risk preferences in finance are elicited using paired-lotteries tests with hypothetical payments. The experimental tests are adapted to the health domain by framing the lotteries as risky treatments in hypothetical healthcare scenarios. Using Maximum Likelihood methods, we estimate the degree of risk aversion in both the financial and the health domain, allowing for the estimates to vary with individual observables. Despite being exposed to both health and financial distress, subjects in our sample tend to be less risk averse in the financial than in the health domain. Risk attitudes in the two domains are also associated to partly distinct characteristics: while married respondents are more risk averse in the wealth domain, subjects with higher education tend to be more risk seeking in the health domain. Subjects affected by chronic diseases appear more risk averse not only in health but also in financial decisions.

Item Type: Monograph (Discussion Paper)
Official URL: http://wwwf.imperial.ac.uk/business-school/
Additional Information: © 2013 The Authors
Divisions: Social Policy
Subjects: H Social Sciences > HV Social pathology. Social and public welfare. Criminology
JEL classification: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
I - Health, Education, and Welfare > I1 - Health
Sets: Departments > Social Policy
Research centres and groups > LSE Health and Social Care
Date Deposited: 19 Feb 2015 12:52
Last Modified: 27 Sep 2019 23:26
URI: http://eprints.lse.ac.uk/id/eprint/60999

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