domingo, 13 de octubre de 2019

How is the trade-off between adverse selection and discrimination risk affected by genetic testing? Theory and experiment. - PubMed - NCBI

2019 Sep 30;68:102223. doi: 10.1016/j.jhealeco.2019.102223. [Epub ahead of print]

How is the trade-off between adverse selection and discrimination risk affected by genetic testing? Theory and experiment.

Author information

1: University of Los Andes - Cede (Colombia) and Toulouse School of Economics, France. Electronic address: d.bardey@uniandes.edu.co.
2: Toulouse School of Economics, CNRS, University of Toulouse Capitole, Toulouse, France. Electronic address: philippe.dedonder@tse-fr.eu.
3: Universidad del Rosario, Bogota, Colombia. Electronic address: cesar.mantilla@urosario.edu.co.

Abstract

We develop a theoretical analysis of two widely used regulations of genetic tests, Disclosure Duty and Consent Law, and we run an experiment in order to shed light on both the take-up rate of genetic testing and on the comparison of policyholders' welfare under the two regulations. Disclosure duty forces individuals to reveal their test results to insurers, exposing them to a discrimination risk. Consent Law allows them to hide any detrimental information, resulting in adverse selection. The experiment results in much lower genetic tests take-up rates with Disclosure Duty than with Consent Law, showing that subjects are very sensitive to the discrimination risk. Under Consent Law, take-up rates increase with the adverse selection intensity. A decrease in the test cost, and in adverse selection intensity, both make it more likely that Consent Law is preferred to Disclosure Duty.