Optimal expectations and limited medical testing: Evidence from huntington disease. American Economic Review, Forthcoming

We use novel data to study genetic testing among individuals at risk for Huntington disease (HD), a hereditary disease with lim-ited life expectancy. Although genetic testing is perfectly predictive and carries little economic cost, pre-symptomatic testing is rare. Testing rates increase with increases in ex ante risk of having HD. Untested individuals express optimistic beliefs about their health and make decisions (e.g. retirement) as if they do not have HD, even though individuals with confirmed HD behave differently. We suggest that these facts can be reconciled by an optimal expectations model (Brunnermeier and Parker, 2005). Huntington disease (HD) is a degenerative neurological disorder with onset around age 40, a life expectancy of around 60 and a healthy life expectancy of 10 years fewer than that. HD is caused by an inherited expansion in the Huntingtin gene. Individuals with one parent with HD have a 50 percent chance of inheriting the expanded copy of the gene and developing the disease. Since the early 1990s a genetic test has been available. This blood DNA test can provide at-risk individual