Risky business, healthy lives: how risk perception, risk preferences and information influence consumer's risky health choices.

Abstract

Consumer's understanding of health risks is a key determinant of effective risk communication about health care options. Individuals make decisions about their health under uncertainty, yet the influence of risk perception, risk preferences and information processing has not been well researched in the health economics literature. Here, a novel extension of the standard discrete choice experiment framework is developed to investigate the effect of a "risk shock" (the difference between an individual's perceived risk and updated information) on consumption and health care decisions. In the experiment, consumers were asked to evaluate a basket of health service and lifestyle choices to lower cardiovascular risk. While most individuals, on average, aim to lower their CVD risk to a level of 1.37% points below the updated information provided, the response was asymmetrical, whereby the response to a "negative shock" was less than a "positive shock". Furthermore, we find evidence that risk perception, rather than risk preferences, are more likely to affect consumer health and behaviour changes. Given the global pandemic of CVD, these findings suggest there are public health gains to be made from personalised risk communication if it is better tailored to account for individuals' preferences and risk perception.