Motivated denial and preventative health care investments in developing countries

This paper seeks to understand how the denial of health risks and investment in preventative health care are related, and how they are shaped by the underlying environment. I study individuals who derive anticipatory utility from believing that they will be in good health in the future and who are able to actively bias their beliefs. Anticipatory utility provides an incentive to deny health risks. Such denial, however, comes at the potential cost of making overly optimistic decisions. In situations in which even well-informed individuals are unable or unwilling to invest in preventative health care, the likelihood of making a decision that is too optimistic is relatively low and we expect denial to prevail. The constraints to preventative health care investments faced by individuals in developing countries may thus lead to the denial of health risks, which in turn further depresses investment in health. In this context, misinformation is motivated and informing individuals of health risks may have little impact on behavior if the underlying incentives to engage in denial are not removed, that is, if individuals are not empowered to take action. “There is potentially another reason the poor may hold on to beliefs that might seem indefensible: When there is little else they can do, hope becomes essential” (Abhijit Banerjee and Esther Duflo, in Poor Economics, 2011, pp. 60)