Allocating health care resources under risk: risk aversion and prudence matter

In a recent contribution to this journal, M. Hoel correctly shows that under risk aversion the allocation of health resources should be directed to health conditions for which the expected outcomes are below average. In this letter we show that besides risk aversion, the degree of absolute prudence (to be defined in the text) also matters to obtain an optimal allocation. Copyright © 2005 John Wiley & Sons, Ltd.