False Alarm? Estimating the Marginal Value of Health Signals

Abstract

We investigate the marginal value of information in the context of health signals after checkups. Although underlying health status is similar for individuals just below and above a clinical threshold, treatments differ according to the checkup signals they receive. For the general population, whereas health warnings about diabetes increase healthcare utilization, health outcomes do not improve at the threshold. However, among high-risk individuals, outcomes do improve, and improved health is worth its cost. These results indicate that the marginal value of health information depends on setting appropriate thresholds for health warnings and targeting individuals most likely to benefit from follow-up medical care.