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Prevention and Cure Efforts Both Substitute and Complement

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  • Hennessy, David A.
Abstract
Suppose one could expend effort to prevent probabilistic transition to an adverse state, and also effort to expedite probabilistic transition to a beneficial state. Bearing in mind that the efforts occur in different states, should these efforts substitute or complement? Two appealing arguments are in conflict. If cure effort is costly, then the incentive to prevent should be high in order to avoid future cure effort costs, i.e. efforts are gross substitutes in demand. If prevention effort is costly, then the incentive to cure should be low since recidivism is likely, i.e. efforts complement. In a lifetime present value model, we show that both arguments have merit. We also show that the prevalence of the adverse state can rise with a subsidy on cure effort costs.

Suggested Citation

  • Hennessy, David A., 2012. "Prevention and Cure Efforts Both Substitute and Complement," Staff General Research Papers Archive 35014, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:35014
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    File URL: http://onlinelibrary.wiley.com/doi/10.1002/hec.1270/pdf
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    References listed on IDEAS

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    Cited by:

    1. Griebenow, Malte, 2023. "Should physicians team up to treat chronic diseases?," Journal of Health Economics, Elsevier, vol. 89(C).
    2. Bate, Andrew M. & Jones, Glyn & Kleczkowski, Adam & MacLeod, Alan & Naylor, Rebecca & Timmis, Jon & Touza, Julia & White, Piran C.L., 2016. "Modelling the impact and control of an infectious disease in a plant nursery with infected plant material inputs," Ecological Modelling, Elsevier, vol. 334(C), pages 27-43.
    3. Richard Peter, 2021. "A fresh look at primary prevention for health risks," Health Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 1247-1254, May.
    4. Mario Menegatti, 2014. "Optimal choice on prevention and cure: a new economic analysis," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(4), pages 363-372, May.
    5. Brianti, Marco & Magnani, Marco & Menegatti, Mario, 2018. "Optimal choice of prevention and cure under uncertainty on disease effect and cure effectiveness," Research in Economics, Elsevier, vol. 72(2), pages 327-342.
    6. Wang, Tong, 2012. "Essays on the Economics of Disease, with Particular Reference to Livestock," ISU General Staff Papers 201201010800003982, Iowa State University, Department of Economics.
    7. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, Maria Deni, 2023. "An Ounce of Prevention for a Pound of Cure: Efficiency of Community-Based Healthcare," IZA Discussion Papers 16350, Institute of Labor Economics (IZA).
    8. Desu Liu & Mario Menegatti, 2019. "Optimal saving and health prevention," Journal of Economics, Springer, vol. 128(2), pages 177-191, October.
    9. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, María Deni, 2024. "An Ounce of Prevention for a Pound of Cure: Basic Health Care and Efficiency in Health Systems," IDB Publications (Working Papers) 13433, Inter-American Development Bank.

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    Keywords

    health care policy; lifetime present value; medical expenditures; poisson processes;
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