Abstract

http://ssrn.com/abstract=262046
 
 

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Public Policy Toward Life Saving: Maximize Lives Saved vs. Consumer Sovereignty


William Gould


Independent

Richard H. Thaler


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

1980

NBER Working Paper No. w0419

Abstract:     
This paper is a theoretical analysis of individual and societal demands for life saving. We begin by demonstrating that the allocation of health expenditures to maximize lives saved may be inconsistent with the willingness-to-pay criterion and consumer sovereignty. We further investigate the effects of information on aggregate willingness to pay. This discussion is related to the concepts of statistical and identified lives. Methods of financing health expenditures are considered. We show that risk averse individuals may reject actuarially fair insurance for treatments of fatal diseases even if they plan to pay for the treatment if they get sick. This result has implications regarding the choice of treatment or prevention. Finally, we examine the importance of the timing of life-saving decisions. A conflict arises between society's preferences before it is known who will be sick and after, even if it is known in advance how many people will be sick.

Number of Pages in PDF File: 48

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Date posted: June 28, 2004  

Suggested Citation

Gould, William and Thaler, Richard H., Public Policy Toward Life Saving: Maximize Lives Saved vs. Consumer Sovereignty (1980). NBER Working Paper No. w0419. Available at SSRN: http://ssrn.com/abstract=262046

Contact Information

William Gould
Independent
No Address Available
Richard H. Thaler (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5208 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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