In sickness but not in wealth: field evidence on patients’risk preferences in the financial and health domain

We conduct a field experiment to assess whether risk preferences significantly differ across the health and financial domains when they are elicited through the same paired-lotteries method. We administrate the Holt and Laury (2002) multiple price list (MPL) experimental tests to a sample of 300 patients attending outpatients’ clinics in a university hospital in Athens, during the Greek financial crisis. Risk preferences in finance are elicited using paired-lotteries tests with hypothetical payments. The experimental tests are adapted to the health domain by framing the lotteries as risky treatments in hypothetical healthcare scenarios. Using Maximum Likelihood methods, we estimate the degree of risk aversion in both the financial and the health domain, allowing for the estimates to vary with individual observables. Despite being exposed to both health and financial distress, subjects in our sample tend to be less risk averse in the financial than in the health domain. Risk attitudes in the two domains are also associated to partly distinct characteristics: while married respondents are more risk averse in the wealth domain, subjects with higher education tend to be more risk seeking in the health domain. Subjects affected by chronic diseases appear more risk averse not only in health but also in financial decisions.