nep-ias New Economics Papers
on Insurance Economics
Issue of 2012‒05‒02
six papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Societal preferences for standard health insurance coverage in the Netherlands: A cross-sectional study. By Wulp, I. van der; Hout, W.B. van den; Vries, M. de; Stiggelbout, AM.; Akker-van Marle, E.M. van den
  2. Insurance demand under ambiguity and conflict for extreme risks : Evidence from a large representative survey. By Théodora Dupont-Courtade
  3. When the tide goes out: unemployment insurance trust funds and the Great Recession, lessons for and from New England By Jennifer Weiner
  4. Effects of NCMS Coverage on Access to Care and Financial Protection in China By Zhiyuan Hou; Ellen Van de Poel; Eddy Van Doorslaer; Baorong Yua; Qingyue Menge
  5. Job Lock: Evidence from a Regression Discontinuity Design By Robert W Fairlie; Kanika Kapur; Susan Gates
  6. "What Did Corporate Executives, Outside Directors and Large Shareholders Really Do ?: Corporate Governance of Tokyo Marine and Tasiho Marine in Mitsubishi and Mitsui Zaibatsu" (in Japanese) By Tetsuji Okazaki

  1. By: Wulp, I. van der; Hout, W.B. van den (Tilburg University); Vries, M. de (Tilburg University); Stiggelbout, AM.; Akker-van Marle, E.M. van den
    Date: 2012
  2. By: Théodora Dupont-Courtade (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This paper investigates how the general public behaves when confronted with low probability events and ambiguity in an insurance context. It reports the results of a questionnaire completed by a large representative sample of the French population that aims at separating attitudes toward risk, imprecision and conflict and at determining if there is a demand for ambiguous and extreme event risks. The data show a strong distinction between two aspects of the problem : the decision of purchasing insurance and the willingness to pay. In the decision to insure, more than 25% of the respondents refuse to buy insurance and people are more willing to insure in a risky situation than in an ambiguous one. This certain taste for risk can be explained by the respondents' observable characteristics. In addition, it highlights a lack of confidence in the insurance markets. When it comes to willingness to pay, people exhibit ambiguity seeking behaviors. They are willing to pay more under risk than under ambiguity (embracing here imprecision and conflict), revealing that people consider ambiguous situations as inferior. Furthermore, respondents behave differently under imprecision and conflict. They exhibit a preference for consensual information and dislike conflicts. However, the willingness to pay is poorly correlated with observable characteristics.
    Keywords: Ambiguity, imprecision, conflict, decision making, extreme risk, insurance demand, willingness to pay.
    JEL: C93 D81 D83 Q54
    Date: 2012–01
  3. By: Jennifer Weiner
    Abstract: The unemployment insurance (UI) program is a federal-state program aiming to: (1) provide temporary, partial compensation for the lost earnings of individuals who become unemployed through no fault of their own and (2) serve as a stabilizer during economic downturns by injecting additional resources into the economy in the form of benefit payments. Each state, plus the District of Columbia, Puerto Rico, and the Virgin Islands, operates its own UI program within federal guidelines. ; Since the onset of the Great Recession in late 2007, two-thirds of state UI programs depleted their trust funds and borrowed from the federal government in order to continue paying benefits to unemployed workers. This research examines why some state UI programs experienced insolvency during the Great Recession or in its aftermath while others did not. It places special emphasis on New England, describing the key features of the region’s UI programs and examining the solvency of their trust funds over time, as well reforms enacted in these states that impact solvency. It concludes by offering policy options for strengthening UI trust fund solvency in the future.
    Keywords: Unemployment insurance ; Recessions ; Recessions - New England ; Unemployment insurance - New England
    Date: 2012
  4. By: Zhiyuan Hou (Shandong University, Jinan, China); Ellen Van de Poel (Erasmus University Rotterdam, Netherlands); Eddy Van Doorslaer (Erasmus University Rotterdam, Netherlands); Baorong Yua (Shandong University, Jinan, China); Qingyue Menge (Peking University, China)
    Abstract: The introduction of the New Cooperative Medical Scheme in rural China is one of the largest health care reforms in the developing world since the millennium. The literature to date has mainly used the uneven rollout of NCMS across counties as a way of identifying its effects on access to care and financial protection. This study exploits the cross-county variation in NCMS generosity in 2006 and 2008 in Ningxia and Shandong province and adopts an instrumenting approach to estimate the effect of a continuous measure of coverage level. Our results confirm earlier findings of NCMS being effective in increasing access to care, but not increasing financial protection. In addition, we find that NCMS enrollees are sensitive to the incentives set in the NCMS design when choosing their provider, but also that providers seem to respond by increasing prices and/or providing more expensive care.
    Keywords: Health insurance; access; financial protection; China
    JEL: D63 I14
    Date: 2012–04–16
  5. By: Robert W Fairlie (University of California); Kanika Kapur (University College Dublin); Susan Gates (RAND)
    Abstract: Employer-provided health insurance in the United States is suspected of restricting job mobility, resulting in “job lock.” Previous research on job lock finds mixed results using several methodologies. We take a new approach to examine whether employer-based health insurance discourages job mobility by exploiting the discontinuity created at age 65 through the qualification for Medicare. Using a novel procedure for identifying age in months from matched monthly CPS data and a relatively unexplored administration measure of job mobility, we compare job mobility among male workers in the months just prior to turning age 65 to job mobility in the months just after turning age 65. We find no evidence that job mobility increases at the age 65 threshold when Medicare eligibility starts. Our results are robust to different bandwidths, non-linear age profiles, and frequency of age measurement. The upper bounds of 95 percent confidence intervals for these estimates can rule out the existence of any job lock in some cases, and in most cases can rule out the large levels of job lock found in many previous studies in the literature. We also do not find evidence that other factors such as retirement, reduction in hours worked, social security eligibility, pension eligibility, and sample changes confound the results on job mobility in the month individuals turn 65.
    Keywords: Job lock; health insurance; Medicare
    Date: 2012–04–23
  6. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper addresses a fundamental question on corporate governance, "What did corporate executives, outside directors and large shareholders really do ?" Although this question is essential, it has not been fully addressed in the literature, basically due to the constraint of relevant materials. This paper overcomes this problem by using a detailed diary written by Hachisaburo Hirao, who worked for many large companies, including Tokyo Marine and Fire Insurance Co. and Taisho Marine and Fire Insurance Co. in prewar Japan. In this diary he described in detail how corporate executives, outside directors and large shareholders thought and acted. Based on this diary and other related materials, it is revealed that in Tokyo Marine and Fire Insurance Co. and Taisho Marine and Fire Insurance Co., planning and implementation of managerial policies were basically entrusted to their corporate executives. This means that there existed agency relationships between shareholders and corporate executives. Meanwhile, the agency problem was resolved through a voice mechanism from outside directors representing large shareholders and large shareholders themselves to corporate executives. Outside directors and large shareholders indeed gave advice, pressure and ratification on managerial policies. These findings imply that these companies were governed by a typical Anglo-Saxon mode of corporate governance.
    Date: 2011–10

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