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Related Experiment Videos

Prevention and cure efforts both substitute and complement.

David A Hennessy1

  • 1Department of Economics and Center for Agricultural and Rural Development, Iowa State University, Ames, IA 50011-1070, USA. hennessy@iastate.edu

Health Economics
|September 1, 2007
PubMed
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Efforts to prevent adverse health states and cure existing ones can either substitute or complement each other. This study reveals that subsidies for cure efforts may paradoxically increase the prevalence of adverse states.

Area of Science:

  • Health economics
  • Decision theory
  • Public health policy

Background:

  • Individuals may invest effort to prevent adverse health states or expedite recovery.
  • The relationship between prevention and cure efforts, particularly when occurring in different health states, is complex.
  • Conflicting economic arguments exist regarding whether these efforts should substitute or complement each other.

Purpose of the Study:

  • To analyze the relationship between prevention and cure efforts in probabilistic health state transitions.
  • To determine if these efforts act as substitutes or complements in a lifetime economic model.
  • To investigate the impact of cure subsidies on the prevalence of adverse health states.

Main Methods:

  • Development of a lifetime present value economic model.

Related Experiment Videos

  • Analysis of decision-making under probabilistic transitions between health states.
  • Simulation of the effects of subsidies on cure effort costs.

    • Main Results:

    • Both arguments regarding substitution and complementarity of efforts have economic merit.
    • The incentive to prevent adverse states increases when cure efforts are costly (substitutes).
    • The incentive to cure decreases when prevention efforts are costly, as recidivism is likely (complements).

    Conclusions:

    • Prevention and cure efforts can be either substitutes or complements depending on cost structures.
    • Subsidies on cure effort costs can lead to an increased prevalence of adverse health states.
    • Policy interventions require careful consideration of the interplay between prevention and cure efforts.