TY  - JOUR
AU  - Gould,William
AU  - Thaler,Richard
TI  - Public Policy Toward Life Saving: Maximize Lives Saved vs. Consumer Sovereignty
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 419
PY  - 1980
Y2  - 1980
UR  - http://www.nber.org/papers/w0419
L1  - http://www.nber.org/papers/w0419.pdf
N1  - Author contact info:
Richard H. Thaler
Booth School of Business
University of Chicago
5807 South Woodlawn Ave
Chicago, IL 60637
Tel: 773/702-5208
Fax: 773/834-9134
E-Mail: richard.thaler@chicagobooth.edu
AB  - This paper is a theoretical analysis of individual and societal demands for life saving. We begin by demonstrating that the allocation of health expenditures to maximize lives saved may be inconsistent with the willingness-to-pay criterion and consumer sovereignty. We further investigate the effects of information on aggregate willingness to pay. This discussion is related to the concepts of statistical and identified lives. Methods of financing health expenditures are considered. We show that risk averse individuals may reject actuarially fair insurance for treatments of fatal diseases even if they plan to pay for the treatment if they get sick. This result has implications regarding the choice of treatment or prevention. Finally, we examine the importance of the timing of life-saving decisions. A conflict arises between society's preferences before it is known who will be sick and after, even if it is known in advance how many people will be sick.
ER  -