Measuring Multivariate Risk Preferences in the Health Domain

from Journal of Health Economics at http://bit.ly/2EUcAhh on December 28, 2018 at 11:45AM

Publication date: Available online 27 December 2018

Source: Journal of Health Economics

Author(s): Arthur E. Attema, Olivier l’Haridon, Gijs van de Kuilen

Abstract

We investigate univariate and multivariate risk preferences for health (longevity) and wealth. We measure attitudes toward correlation and attitudes toward higher order dependence structures such as cross-prudence and cross-temperance, making use of the risk apportionment technique proposed by Eeckhoudt et al. (2007). For multivariate gains, we find correlation aversion and cross-prudence in longevity and wealth. For losses, we observe correlation seeking and cross-imprudence. We do not find clear evidence for cross-temperance. Our results indicate that longevity and wealth are considered to be substitutes for gains, but not for losses. Second, univariate (higher order) risk preferences are comparable for longevity and wealth, although somewhat closer to linearity for wealth. Third, we find evidence that attitudes toward dependence structures in the health domain are sign-dependent.