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

David Bardey, Philippe De Donder, César Mantilla

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

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.

Original languageEnglish (US)
Article number102223
JournalJournal of Health Economics
Volume68
DOIs
StatePublished - Dec 2019

All Science Journal Classification (ASJC) codes

  • Health Policy
  • Public Health, Environmental and Occupational Health

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