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Published on: January 21, 2017
Risk preferences: consequences for test and treatment thresholds and optimal cutoffs
Stefan Felder1,2, Thomas Mayrhofer2
1Faculty of Business and Economics, University of Basel, Basel, Switzerland (SF).
Summary
Understanding risk preferences, including risk aversion, prudence, and temperance, is crucial for medical decisions. These preferences lower diagnostic test and treatment thresholds, potentially increasing screening benefits in low prevalence settings.
Area of Science:
- Decision Analysis
- Health Economics
- Behavioral Economics
Background:
- Risk attitudes encompass risk aversion and higher-order preferences like prudence and temperance.
- These preferences significantly influence health-related decisions, including medical testing and treatment.
- Understanding these attitudes is vital for optimizing healthcare strategies.
Purpose of the Study:
- To analyze the impact of risk preferences on medical test and treatment decisions.
- To determine how risk aversion, prudence, and temperance affect test/treatment thresholds and diagnostic cutoff values.
- To evaluate the implications for healthcare diagnostics, particularly in low prevalence scenarios.
Main Methods:
- Economic modeling of decision-making under uncertainty.
- Analysis of risk preferences (risk aversion, prudence, temperance) and their effect on thresholds.
- Calculation of optimal cutoff values for diagnostic tests based on risk attitudes.
Main Results:
- Risk aversion lowers both test and treatment thresholds and decreases optimal test cutoff values.
- Risk vulnerability, incorporating higher-order preferences, further reduces thresholds and cutoff values, especially with comorbidity risk.
- Common utility functions imply risk vulnerability, suggesting a significant impact.
Conclusions:
- Risk preferences play a critical role in medical decision-making, influencing test and treatment uptake.
- Diagnostic tests may be more beneficial in low prevalence settings when patient risk preferences are considered.
- Incorporating risk attitudes into healthcare economics can lead to more personalized and effective medical strategies.
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