Thomas Rouyard, Arthur Attema, Richard Baskerville, José Leal, Alastair
Gray, “Risk Attitudes of People with ‘Manageable’ Chronic Disease: An
Analysis Under Prospect Theory.” Social Science & Medicine 214: 144-153, 2018.
• Many patients are non-compliant with recommended medical treatments, at a cost to their health. Is it possible that their choices reflect risk-loving behavior in the loss domain?
• Two outcomes are examined in this study, longevity and quality of life. The usable sample size is n=110; 52 members of this sample have Type 2 diabetes mellitus.
• The empirical approach is aimed at identifying the prospect theory “value function” (in both the loss and gain domains) and the probability weighting (of an objective probability of .5). The estimation of the value function includes an estimation of the extent of loss aversion.
• Many questions are of the nature: Your status quo is to live 20 more years with an excellent quality of life. You must choose between option A, which would give you (with certainty) an additional 3 years of life with a pretty good quality of life, or option B, which offers a 50% chance of gaining 6 years of life, 3 years of high quality and 3 years of low quality, and a 50% chance of remaining with the status quo.
• For loss aversion, the relevant question is of the nature: The status quo is to live 20 more years with an excellent quality of life. A risky prospect available to you involves a 50% probability of gaining an additional 10 years of life with a pretty good quality of life, and a 50% probability of losing L years of life. What is the L that makes you indifferent between the risky prospect and the status quo?
• The authors find that most folks are risk averse in both the loss and gains domains. Older people tend to be more risk averse. Loss aversion is significant (median λ=1.19).
• It probably isn’t risk seeking that leads to medical noncompliance.
• Many patients are non-compliant with recommended medical treatments, at a cost to their health. Is it possible that their choices reflect risk-loving behavior in the loss domain?
• Two outcomes are examined in this study, longevity and quality of life. The usable sample size is n=110; 52 members of this sample have Type 2 diabetes mellitus.
• The empirical approach is aimed at identifying the prospect theory “value function” (in both the loss and gain domains) and the probability weighting (of an objective probability of .5). The estimation of the value function includes an estimation of the extent of loss aversion.
• Many questions are of the nature: Your status quo is to live 20 more years with an excellent quality of life. You must choose between option A, which would give you (with certainty) an additional 3 years of life with a pretty good quality of life, or option B, which offers a 50% chance of gaining 6 years of life, 3 years of high quality and 3 years of low quality, and a 50% chance of remaining with the status quo.
• For loss aversion, the relevant question is of the nature: The status quo is to live 20 more years with an excellent quality of life. A risky prospect available to you involves a 50% probability of gaining an additional 10 years of life with a pretty good quality of life, and a 50% probability of losing L years of life. What is the L that makes you indifferent between the risky prospect and the status quo?
• The authors find that most folks are risk averse in both the loss and gains domains. Older people tend to be more risk averse. Loss aversion is significant (median λ=1.19).
• It probably isn’t risk seeking that leads to medical noncompliance.
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