Abstract
We integrate anticipatory utility and endogenous beliefs about future negative health shocks into a life-cycle model of physiological aging. Individuals care about their future utility derived from their health status and form endogenous beliefs about the probability of a negative health shock. We calibrate the model with data from gerontology and use the model to predict medical testing decisions of individuals. We find that anticipation in combination with endogenous beliefs provides a quantitatively strong motive to avoid medical testing for Huntington’s disease, which explains the low testing rates found empirically. We also study the case of breast and ovarian cancer and provide an explanation for why testing rates depend on the individual’s income when treatment is available.
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