Skip to main content

Improving Prevention Compliance through Appropriate Incentives: Theoretical Modelling and Empirical Evidence

Summary

This paper explores the effects of insurance parameters and complementary information environment on the patient’s primary prevention activity. The theoretical model is based on a principal-agent setting in which the patient acts as an agent in deciding about his prevention efforts. The insurer chooses the coverage level and therefore the level of patient’s cost sharing and decides on his monitoring activities. The empirical analysis looks at the patient’s prevention decision in the case of smoking. Using a hazard model in discrete time, the decision to change behaviour depends on health status, education, age and working time but not on the insurance system.

References

  • Barigozzi, Francesca (2004), “Reimbursing Preventive Care”, The Geneva Papers on Risk and Insurance Theory, 29, pp. 165–186.

    Article  Google Scholar 

  • Becker, Gary, and Kevin Murphy (1988), “A Theory of Rational Addiction”, Journal of Political Economy, 26, pp. 675–700.

    Article  Google Scholar 

  • Chaloupka, Frank, and Kenneth Warner (1999), “The Economics of Smoking”, NBER Working Paper W7047, Cambridge/Mass.

  • Cohen, Alma, and Litan Einav (2007), “Estimating Risk Preferences from Deductible Choice”, American Economic Review, 97, pp. 745–788.

    Article  Google Scholar 

  • Cohen, Joshua, Peter Neumann, and Milton Weinstein (2008), “Does Preventive Care Save Money? Health Economics and the Presidential Candidates”, New England Journal of Medicine, 358, pp. 661–663.

    Article  Google Scholar 

  • Contoyannis, Paul, and Andrew M. Jones (2004), “Socio-Economic Status, Health and Lifestyle”, Journal of Health Economics, 23, pp. 965–995.

    Article  Google Scholar 

  • Cowell, Alexander J. (2006), “The Relationship between Education and Health Behavior: Some Empirical Evidence”, Health Economics, 15, pp. 125–146.

    Article  Google Scholar 

  • Disney, Richard, Carl Emmerson, and Matthew Wakefield (2006), “Ill Health and Retirement in Britain: A Panel Data-based Analysis”, Journal of Health Economics, 25, pp. 621–649.

    Article  Google Scholar 

  • Dracup, Kathleen A., and Afaf J. Meleis (1982), “Compliance: an Interactionist Approach”, Nursing Research, 31, pp. 31–36.

    Article  Google Scholar 

  • Ehrlich, Isaac, and Gary Becker (1972), “Market Insurance, Self-Insurance, and Self-Protection”, The Journal of Political Economy, 80, pp. 623–648.

    Article  Google Scholar 

  • Ellis, Randell P., and Willard G. Manning (2007), “Optimal Health Insurance for Prevention and Treatment”, Journal of Health Economics, 26, pp. 1128–1150.

    Article  Google Scholar 

  • Forster, Martin, and Andrew M. Jones (2001), “The Role of Tobacco Taxes in Starting and Quitting Smoking”, Journal of the Royal Statistical Society, Series A, Statistics in Society, 164, pp. 517–547.

    Article  Google Scholar 

  • Giveon, Shmuel, and Ernesto Kahan (2000), “Patient Adherence to Family Practitioners’ Recommendations for Breast Cancer Screening: A Historical Cohort Study”, Family Practice, 17, pp. 42–45.

    Article  Google Scholar 

  • Greenlund, Kurt, Notal Keenan, Lynda Anderson, Margaret Mandelson, Catharine Newton, and Andrea LaCroix (2000): “Does Provider Prevention Orientation Influence Female Patients’ Practices?”, American Journal of Preventive Medicine, 19, pp. 104–110.

    Article  Google Scholar 

  • Grossman, Michael (1972), “On the Concept of Health Capital and the Demand for Health”, Journal of Political Economy, 80, pp. 223–255.

    Article  Google Scholar 

  • Hagan, Ronald, Andrew M. Jones, and Nigel Rice (2006), “Health and Retirement in Europe”, HEDG Working Paper 06/10, University of York.

  • Haynes, R. Brian (1978), “Introduction”, in: R. Brian Haynes, David Sackett, and Wayne Taylor (eds), Compliance in Health Care, Johns Hopkins Press, Baltimore, pp. 1–18.

    Google Scholar 

  • Haynes R. Brian, Heather McDonald, Amit Garg, and Paul Montague (2002), “Interventions for Helping Patients to Follow Prescriptions for Medications”, The Cochrane Database of Systematic Reviews, Issue 2.

  • Hernández-Quevedo, Cristina, Andrew M. Jones, and Nigel Rice (2005), “Reporting Bias and Heterogeneity in Self-assessed Health. Evidence from the British Household Panel Survey”, HEDG Working Paper 05/04, University of York.

  • Jenkins, Stephen P. (1995), “Easy Estimation Methods for Discrete-Time Duration Models”, Oxford Bulletin of Economics and Statistics, 57, pp. 129–138.

    Article  Google Scholar 

  • Jenkins, Stephen P. (1997), “Discrete Time Proportional Hazards Regression”, The Stata Technical Bulletin Reprints, 7, pp. 109–121.

    Google Scholar 

  • Jones, Andrew M. (2007), “Panel Data Methods and Applications to Health Economics”, HEDG Working Paper 07/18, University of York.

  • Kenkel, Donald S. (1991), “Health Behavior, Health Knowledge, and Schooling”, The Journal of Political Economy, 99, pp. 287–305.

    Article  Google Scholar 

  • Kenkel, Donald S. (2000) “Prevention”, in: Anthony J. Culyer und Joseph P. Newhouse (eds), Handbook of Health Economics Volume 1B, Amsterdam et al., pp. 1675–1720.

  • Kenkel, Donald S., Dean Lillard, and Alan Mathios (2006), “The Roles of High School Completion and GED Receipt in Smoking and Obesity”, Journal of Labor Economics, 24, pp. 635–660.

    Article  Google Scholar 

  • Macho-Stadler, Ines, and J. David Pérez-Castrillo (2001), An Introduction to the Economics of Information: Incentives and Contracts, 2nd edition, Oxford.

  • Mas-Colell, Andrew, Michael Whinston, and Jerry Green (1995), Microeconomic Theory, Oxford.

  • Maurer, Jürgen (2009), “Who Has a Clue to Prevention the Flu? Unravelling Supply and Demand Effects on the Take-Up of Influenza Vaccinations”, Journal of Health Economics, 28, pp. 704–717.

    Article  Google Scholar 

  • Miceli, Thomas J., and Dennis Heffley (2002), “Do HMOs Encourage Prevention?: An Analysis of Alternative Health Care Plans”, Contemporary Economic Policy, 20, pp. 429–439.

    Article  Google Scholar 

  • Mullahy, John (1997), “Instrumental-Variable Estimation of Count Data Models: Applications to Models of Cigarette Smoking Behavior”, Review of Economics and Statistics, 79, pp. 586–593.

    Article  Google Scholar 

  • Neubauer, Simone, Robert Welte, Alexandra Beiche, Hans-Helmut Koenig, Katharina Buesch, and Reiner Leidl (2006), “Mortality, Morbidity and Costs Attributable to Smoking in Germany: Update and a 10-Year Comparison”, Tobacco Control, 15, pp. 464–471.

    Article  Google Scholar 

  • Poutvaara, Panu, and Lars H. Siemers (2008), “Smoking and Social Interaction”, Journal of Health Economics, 27, pp. 1503–1515.

    Article  Google Scholar 

  • Rice, Dorothy, Thomas Hodgson, Peter Sinsheimer, Warren Browner, and Andrea Kopstein (1984), “The Economic Costs of the Health Effects of Smoking”, The Milbank Quarterly, 64, pp. 489–547.

    Article  Google Scholar 

  • Schauffler, Helen H., and Michael D. Parkinsion (1993), “Health Insurance Coverage for Smoking Cessation Services”, Health Education Quarterly, 20, pp. 185–206.

    Article  Google Scholar 

  • Shavell, Steven (1979), “On Moral Hazard and Insurance”, Quarterly Journal of Economics, 93, pp. 541–562.

    Article  Google Scholar 

  • Stewart, Jary (1994), “The Welfare Implications of Moral Hazard and Adverse Selection in Competitive Insurance Markets”, Economic Inquiry, 32, pp. 193–208.

    Article  Google Scholar 

  • Sturm, Roland (2002), “The Effects of Obesity, Smoking, and Drinking on Medical Problems and Costs”, Health Affairs, 21, pp. 245–253.

    Article  Google Scholar 

  • van Deuverden, Kristina (2004), „Die Erhöhung der Tabaksteuer zur Finanzierung versicherungsfremder Leistungen in der gesetzlichen Krankenversicherung“ (The Increase of Tobacco Taxes to Finance Extraneous Insurance Benefits in the German SHI), Discussion Paper 187, Halle Institute for Economic Research.

  • Vick, Sandra, and Anthony Scott (1998), “Agency in Health Care. Examining Patients’ Preferences for Attributes of the Doctor-Patient Relationship”, Journal of Health Economics, 17, pp. 587–605.

    Article  Google Scholar 

  • Volpp, Kevin, Andrea Troxel, Marc Pauly, Henry Glick, Andrea Puig, David Asch, Robert Galvin, Jingsan Zhu, Fei Wan, Jill DeGuzman, Elizabeth Corbett, Janet Weiner, and Janet Audrain-McGovern (2009), “A Randomized, Controlled Trial of Financial Incentives for Smoking Cessation”, New England Journal of Medicine, 360, pp. 699–709.

    Article  Google Scholar 

  • Welte, Robert, Hans-Helmut König, and Reiner Leidl (2000), “The Costs of Health Damage and Productivity Losses Attributable to Cigarette Smoking in Germany”, European Journal of Public Health, 10, pp. 31–38.

    Article  Google Scholar 

  • Wooldridge, Jeffrey M. (2002), Econometric Analysis of Cross Section and Panel Data, Cambridge et al.

  • Zweifel, Peter, and Willard G. Manning (2000), “Moral Hazard and Consumer Incentives in Health Care”, in: Anthony J. Culyer and Joseph P. Newhouse (eds), Handbook of Health Economics, Vol. 1A, Amsterdam et al., pp. 409–459.

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Udo Schneider.

Additional information

For helpful comments we would like to thank Stefan Napel, Stefan Felder, Andrew Jones, Nigel Rice, Andreas Schmid and two anonymous referees. The remaining errors are entirely ours.

Rights and permissions

Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License ( https://creativecommons.org/licenses/by/2.0 ), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Reprints and Permissions

About this article

Cite this article

Schneider, U., Zerth, J. Improving Prevention Compliance through Appropriate Incentives: Theoretical Modelling and Empirical Evidence. Swiss J Economics Statistics 147, 71–106 (2011). https://doi.org/10.1007/BF03399342

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF03399342

JEL-Classification

  • I12
  • D82
  • C23

Keywords

  • incentives in prevention
  • information distribution
  • hazard model