nep-ias New Economics Papers
on Insurance Economics
Issue of 2014‒04‒29
seven papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Business Management

  1. Is there a demand for multi-year crop insurance? By Maria Osipenko; Zhiwei Shen; Martin Odening;
  3. Accounting for severity of risk when pricing insurance products By Ramon Alemany; Catalina Bolance; Montserrat Guillen
  4. Single Mothers and the Earned Income Tax Credit: Insurance Without Disincentives? By Artheya, Kartik; Reilly, Devin; Simpson, Nicole B.
  5. Scraping By: Income and Program Participation After the Loss of Extended Unemployment Benefits By Rothstein, Jesse; Valletta, Robert G.
  6. Pesticides and health: A review of evidence on health effects, valuation of risks, and benefit‐cost analysis By Andersson, Henrik; Tago, Damian; Treich, Nicolas
  7. Disaster Management in ASEAN By Yasuyuki SAWADA; Fauziah ZEN

  1. By: Maria Osipenko; Zhiwei Shen; Martin Odening;
    Abstract: In this paper we adapt a dynamic discrete choice model to examine the aggregated demand for single- and multi-year crop insurance contracts. We show that in a competitive insurance market with heterogeneous risk averse farmers, there is simultaneous demand for both insurance contracts. Moreover, the introduction of multi-year contracts enhances the market penetration of insurance products. Using U.S. corn yield data, we empirically assess the potential of multi-year crop insurance.
    Keywords: multi-year insurance, index-based crop insurance, dynamic discrete choice model
    JEL: D81 G22 Q14
    Date: 2014–04
  2. By: C. J. Krizan; Adela Luque; Alice Zawacki
    Date: 2014–04
  3. By: Ramon Alemany (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona); Catalina Bolance (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona); Montserrat Guillen (Department of Econometrics, Riskcenter-IREA, Universitat de Barcelona)
    Abstract: We design a system for improving the calculation of the price to be charged for an insurance product. Standard pricing techniques generally take into account the expected severity of potential losses. However, the severity of a loss can be extremely high and the risk of a severe loss is not homogeneous for all policy holders. We argue that risk loadings should be based on risk evaluations that avoid too many model assumptions. We apply a nonparametric method and illustrate our contribution with a real problem in the area of motor insurance.
    Keywords: quantile, value-at-risk, loss models, extremes
    Date: 2014–04
  4. By: Artheya, Kartik (Federal Reserve Bank of Richmond); Reilly, Devin (University of Pennsylvania); Simpson, Nicole B. (Colgate University)
    Abstract: The Earned Income Tax Credit (EITC) is the single most important transfer program in place in the United States. An aspect of the EITC that has received little attention thus far is its role as a public insurance program. Yet, the structure of the EITC necessarily protects its primary class of recipients, unskilled single mothers, against major risks they face to both wages and changes in family structure. Our study provides the first quantitative statement about the insurance provided by the EITC. We study a dynamic model of consumption, savings, and labor supply in which households face wage and demographic risk, but have only limited self-insurance capacity. We use the model to compare outcomes under the EITC to the counterfactual in which it is completely eliminated. We find that the EITC provides substantial insurance to unskilled single mothers: The program reduces consumption volatility, as measured by the coefficient of the variation, by 12 percentage points or more, even as it allows these households to save less. Importantly, this insurance provision may not be compromising incentives to work: The model suggests that the EITC increases the labor supply of unskilled single mothers substantially at the extensive margin.
    Keywords: Taxation and Subsidies; Labor Supply; Insurance
    JEL: H22 H24 J22
    Date: 2014–04–14
  5. By: Rothstein, Jesse; Valletta, Robert G.
    Abstract: Despite unprecedented extensions of available unemployment insurance (UI) benefits during the “Great Recession†of 2007-09 and its aftermath, large numbers of recipients exhausted their maximum available UI benefits prior to finding new jobs. Using SIPP panel data and an eventstudy regression framework, we examine the household income patterns of individuals whose jobless spells outlast their UI benefits, comparing the periods following the 2001 and 2007-09 recessions. Job loss reduces household income roughly by half on average, and for UI recipients benefits replace just under half of this loss. Accordingly, when benefits end the household loses UI income equal to roughly one-quarter of total pre-separation household income (and about one-third of pre-exhaustion household income). Only a small portion of this loss is offset by increased income from food stamps and other safety net programs. The share of families with income below the poverty line nearly doubles. These patterns were generally similar following the 2001 and 2007-09 recessions and do not vary dramatically by household age or income prior to job loss.
    Keywords: Social and Behavioral Sciences
    Date: 2014–02–01
  6. By: Andersson, Henrik; Tago, Damian; Treich, Nicolas
    Date: 2014–03
  7. By: Yasuyuki SAWADA (Singapore Institute of International Affairs (SIIA)); Fauziah ZEN (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: While the Asian countries have been successful in achieving economic growth and poverty reduction, the region cannot avoid exposure to a variety of disasters. Indeed, Asia, particularly the area of the ASEAN Member States (AMSs), is the most prone region to disasters in the world. The paper examines the experience of ASEAN and other countries and regions in the world on disaster management, and looks at the research literature, in order to provide insights, lessons and recommendations for the way forward for strengthened disaster management in AMSs and ASEAN beyond 2015. Particularly, we will summarize different approaches towards effective disaster risk coping strategy and regional cooperation on disaster management. By doing so, we aim at providing a clue to answer the question of how we should protect ourselves and the people of the region and the entire world from catastrophes.
    Keywords: Natural disasters; Manmade disasters; Disaster management; Insurance; Risk Sharing; ASEAN; East Asia
    JEL: H53 G01 H84 Q54
    Date: 2014–01

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