RESEARCH ARTICLE


The Effect of Medical Test to Belief Updating and Willingness to Pay for Health Insurance Premium: Evidences from Laboratory Experiment



Restiatun Massardi1, *, Artidiatun Adji2, Rimawan Pradiptyo2
1 Department of Economics, Faculty of Economics and Business, Universitas Tanjungpura, West Kalimantan, Indonesia
2 Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada, Yogyakarta, Indonesia


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© 2017 Massardi et al.

open-access license: This is an open access article distributed under the terms of the Creative Commons Attribution 4.0 International Public License (CC-BY 4.0), a copy of which is available at: https://creativecommons.org/licenses/by/4.0/legalcode. This license permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

* Address correspondence to this author at the Department of Economics and Business, Faculty of Economics, Tanjungpura University, JL. Dr Hadari Nawawi No. 1 Pontianak, West Kalimantan, Indonesia; Tel: 62 0561 766840; Fax: 62 0561 766840; E-mails: hariestya@yahoo.com, restiatun@untan.ac.id


Abstract

Purpose:

The objective of this study is to analyze the effect of the results of medical tests on three health indicators, i.e. blood pressure, cholesterol level, and blood glucose level, for belief updating and willingness to pay for health insurance. Specifically, this study examined whether individuals update their belief on their health status after being informed the results of their medical tests. This study also investigated whether there is a significant difference between the willingness to pay for the individuals who were informed about the results of their medical tests and of individuals who were not informed about the results of their medical tests.

Approach:

This study utilizes laboratory experiments. There are two groups in the experiments: the treatment group and the control group. The individuals in the treatment group receive information on the results of the medical tests which cover blood pressure, glucose level and cholesterol level tests. The individuals in the control group do not receive any information. We compare the willingness to pay between the treatment group and the control group.

Results:

There are significant differences in the value of willingness to pay for health insurance premium based on prior belief (individuals’ belief prior to the medical tests) and on posterior belief (individuals’ belief after the medical tests) between control group and treatment group. Belief updating occurs when there is a difference between prior belief and posterior belief due the presence of an event.

Value:

This work contributes to the better understanding about the individual decision making on health insurance purchase.

Conclusion:

The medical tests on blood pressure, cholesterol level, and glucose level significantly affect the willingness to pay for health insurance premium. There are significant changes in individual’s posterior belief due to the information provided by the medical tests. An individual’s willingness to pay for health insurance premium may change due to a change in his or her health status belief.

Keywords: Health insurance , Laboratory experiment , Prior belief , Posterior belief , Willingness to pay .