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on Insurance Economics |
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Issue of 2011‒04‒30
nine papers chosen by Soumitra K Mallick Indian Institute of Social Welfare and Business Management |
| By: | Bell, Peter |
| Abstract: | An important question in insurance is the amount of coverage to purchase. A standard microeconomic model for insurance shows that full insurance is optimal. I present a different model where the decision variable is the number of put options and show that full insurance is still optimal, but the number of put options required to achieve this is larger than the endowment of risky assets. The model I present is based on a binomial model for a financial market, where the put option represents insurance. |
| Keywords: | Insurance; put option; binomial model; risk averse; risk neutral |
| JEL: | G11 G22 C60 |
| Date: | 2011–04–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:30469&r=ias |
| By: | Juergen Jung (Department of Economics, Towson University); Jialu Liu (Department of Economics, Allegheny College) |
| Abstract: | We make use of panel data from the China Health and Nutrition Survey between 1991 and 2006 to investigate whether health insurance increases out-of-pocket (OOP) health expenditure risk. We find that health insurance increases the probability of catastrophic OOP health expenditures using a series of Probit models. We then use two-part as well as sample selection models to account for selection on unobservable variables and find that although the probability of positive OOP health expenditures increases with the availability of health insurance, the actual level of OOP health expenditures decreases. More specifically, we find that for a per- son with positive OOP health expenditures, having health insurance reduces the level of OOP expenses by 12.56 percent while controlling for selection effects. |
| Keywords: | health insurance, exposure to health risk, health care in China, out-of-pocket health expenditure in China, two-part model, bivariate sample selection model, Heckman two- step estimator, China Health and Nutrition Survey (CHNS). |
| JEL: | I11 C33 C34 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:tow:wpaper:2011-04&r=ias |
| By: | Liran Einav; Amy Finkelstein; Stephen P. Ryan; Paul Schrimpf; Mark R. Cullen |
| Abstract: | In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We explore these issues using individual-level panel data from a single firm, which contain information about health insurance options, choices, and subsequent claims. To identify the behavioral response to health insurance coverage and the heterogeneity in it, we take advantage of a change in the health insurance options offered to some, but not all of the firm's employees. We begin with descriptive evidence that is suggestive of both heterogeneous moral hazard as well as selection on it, with individuals who select more coverage also appearing to exhibit greater behavioral response to that coverage. To formalize this analysis and explore its implications, we develop and estimate a model of plan choice and medical utilization. The results from the modeling exercise echo the descriptive evidence, and allow for further explorations of the interaction between selection and moral hazard. For example, one implication of our estimates is that abstracting from selection on moral hazard could lead one to substantially over-estimate the spending reduction associated with introducing a high deductible health insurance option. |
| JEL: | D12 D82 G22 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16969&r=ias |
| By: | Alan B. Krueger; Ilyana Kuziemko |
| Abstract: | Most existing work on the price elasticity of demand for health insurance focuses on employees’ decisions to enroll in employer-provided plans. Yet any attempt to achieve universal coverage must focus on the uninsured, the vast majority of whom are not offered employer-sponsored insurance. In the summer of 2008, we conducted a survey experiment to assess the willingness to pay for a health plan among a large sample of uninsured Americans. The experiment yields price elasticities substantially greater than those found in most previous studies. We use these results to estimate coverage expansion under the Affordable Care Act, with and without an individual mandate. We estimate that 39 million uninsured individuals would gain coverage and find limited evidence of adverse selection. |
| JEL: | H51 I11 I18 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16978&r=ias |
| By: | Nikolay Nenovsky |
| Abstract: | Some ten years ago, Michael Dooley (Dooley, 1997; Dooley, 2000) put forward an insurance model of currency crises, which after some modifications gives a good theoretical basis for explanation of the overall dynamics of the post communist transformation and diversity across countries and periods. The article analyses, within the framework of the insurance model, the role of monetary regimes (currency anchor) and EU enlargement (political and geostrategic anchor) and their relationships. The insurance game model not only contains an explanatory power, but it also has the potential to suggest a range of measures that could be useful in overcoming the "bad" dynamics, which we are witnessing today not only in the new member-states, but also EU-wide. |
| Keywords: | post communist transformation, monetary regimes, insurance model of currency crisis |
| JEL: | F33 F36 P20 P30 |
| Date: | 2010–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2010-997&r=ias |
| By: | Fevang, Elisabeth (Ragnar Frisch Centre for Economic Research); Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research) |
| Abstract: | In most countries, employers are financially responsible for sick pay during an initial period of a worker's absence spell, after which the public insurance system covers the bill. Based on a quasi-natural experiment in Norway, where pay liability was removed for pregnancy-related absences, we show that firms' absence costs significantly affect employees' absence behavior. However, by restricting pay liability to the initial period of the absence spell, firms are discouraged from letting long-term sick workers back into work, since they then face the financial risk associated with subsequent relapses. We show that this disincentive effect is statistically and economically significant. |
| Keywords: | absenteeism, social insurance, experience rating, multivariate hazard rate models |
| JEL: | C14 C41 H55 I18 J23 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5655&r=ias |
| By: | Aurore Pelissier (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Martine Audibert (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Jacky Mathonnat (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Xiao Xian Huang (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I) |
| Abstract: | In the rural health-care organization of China, township hospitals ensure the delivery of basic medical services. Particularly damaged by the economic reforms implemented from 1975 to the end of the 1990s, township hospitals efficiency is questioned, mainly with the implementation since 2003 of the reform of health insurance in rural areas. From a database of 24 randomly selected township hospitals observed over the period 2000-2008 in Weifang prefecture (Shandong), the study examines the efficiency of township hospitals through a two-stage approach and the calculation of the Malmquist index. As curative and preventive medical services delivered at township hospital level use different production processes, two data envelopment analysis models are estimated with different orientation chosen to compute scores. Following Simar and Wilson (2007), as the traditional two-stage methodology is not relevant, we used a double bootstrap strategy. Results show that technical efficiency declines over time. Moreover, township hospitals are less efficient in the production of preventive services than in the production of curative ones. Several variables explained efficiency (township hospitals' and environment's characteristics) but our results suggest that in the context of China, the efficiency of township hospitals is also influenced by unobservable factors. |
| Keywords: | data envelopment analysis;Technical efficiency;Double bootstrapping;China;New Rural Cooperative Medical Scheme;Township Hospitals |
| Date: | 2011–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00587799&r=ias |
| By: | Xiao Xian HUANG (-); Jacky MATHONNAT (Centre d'Etudes et de Recherches sur le Développement International); Martine AUDIBERT (Centre d'Etudes et de Recherches sur le Développement International); Aurore PELISSIER (Centre d'Etudes et de Recherches sur le Développement International) |
| Abstract: | In the rural health-care organization of China, township hospitals ensure the delivery of basic medical services. Particularly damaged by the economic reforms implemented from 1975 to the end of the 1990s, township hospitals efficiency is questioned, mainly with the implementation since 2003 of the reform of health insurance in rural areas. From a database of 24 randomly selected township hospitals observed over the period 2000-2008 in Weifang prefecture (Shandong), the study examines the efficiency of township hospitals through a two-stage approach and the calculation of the Malmquist index. As curative and preventive medical services delivered at township hospital level use different production processes, two data envelopment analysis models are estimated with different orientation chosen to compute scores. Following Simar and Wilson (2007), as the traditional two-stage methodology is not relevant, we used a double bootstrap strategy. Results show that technical efficiency declines over time. Moreover, township hospitals are less efficient in the production of preventive services than in the production of curative ones. Several variables explained efficiency (township hospitals' and environment's characteristics) but our results suggest that in the context of China, the efficiency of township hospitals is also influenced by unobservable factors. |
| Keywords: | data envelopment analysis, Technical efficiency, Double bootstrapping, China, New Rural Cooperative Medical Scheme, Township Hospitals |
| JEL: | O12 I38 I1 G22 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cdi:wpaper:1257&r=ias |
| By: | Irina Peaucelle (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris) |
| Abstract: | Despite the multiplicity of research on the surge of the financial industry the world over, little is done to understand the national context shaping the objectives and designs of this economic sector. The overall image that emerges from the literature is that globalisation and liberalisation of economies make the expansion of this sector indispensable for further development. This paper stresses the heterogeneity of the socio-psychological origins of the need for saving and contribution management, as well as the heterogeneity of the sources of savings and loan funding. In particular this paper discusses the following national characteristics: 1) the social belief in trust that smoothes the progress of insurance and pension fund business in the USA, 2) the traditional preference for saving and lending in France that explains the advance of banks and credit institutions for analysis of financial risks, and 3) the natural resources ground rent of Russian State provides the formation of sovereign-wealth funds, which require an up to date knowledge based investment management. This paper serves as a road sign indicating that the path of uniform financial industry formation is a waste of time and may bring about social and economic troubles. |
| Keywords: | history of finance theories ; pension funds ; insurance and private financial institutions ; sovereign-wealth funds ; financial industry: USA ; France ; Russia |
| Date: | 2011–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00586852&r=ias |