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on Insurance Economics |
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Issue of 2018‒12‒03
eighteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Le, Nga (UNU-MERIT); Groot, Wim (UNU-MERIT and CAPHRI, Maastricht University,); Tomini, Sonila (UNU-MERIT); Tomini, Florian (Institute of Epidemiology and Health Care, UCL Medical School) |
| Abstract: | Health insurance can have important effects on self-employment and self- employment transitions. However, there is a literature gap on the relationship between health insurance and self-employment in low and middle income countries, especially in the context of the rapid expansion of health insurance in these countries. This paper examines this relationship in Vietnam with a focus on the comparison between the voluntary scheme for the informal sector (mostly self-employed workers) and the compulsory insurance for the formal sector (mostly wage workers). We employ a Multinomial Logit Model on a panel from the Vietnamese Household Living Standards Surveys 2010-2014 to investigate the association between health insurance and self-employment entry and exit over time. We show that those with compulsory health insurance in Vietnam, the formal workers, do not have the incentive to start a business compared to those having voluntary insurance. This effect holds true over time in 2012 and 2014. The effect is partly explained by the better enforcement of the compulsory health insurance scheme in Vietnam, making staying out of self-employment (often informal self-employment) a preferred choice. Regarding the effect of health insurance on self- employment exit, we do not find any conclusive evidence on this matter. The rigidity of the economy is highlighted, suggesting important policy implications in the areas of health and labour policies in Vietnam. |
| Keywords: | health insurance, self-employment, Vietnam, self-employment entry, self-employment exit |
| JEL: | I13 J22 O15 |
| Date: | 2018–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018039&r=ias |
| By: | Chakrabarti, Rajashri (Federal Reserve Bank of New York); Pinkovskiy, Maxim L. (Federal Reserve Bank of New York) |
| Abstract: | Through changing the connection between insurance and employment, the Affordable Care Act (ACA) has affected people's incentives to obtain education. We employ a triple-difference strategy comparing counties with different levels of uninsurance pre-ACA and in states with different Medicaid expansion decisions across time to investigate changes in enrollment in different types of higher education institutions. We find that enrollment in less-than-two-year for-profit colleges increased more between high- and low-uninsurance counties in states that expanded Medicaid relative to states that didn't, with nearly all the increase taking place after the 2012 Supreme Court decision that gave states the right to choose not to expand Medicaid. Differential enrollment is flat for all other comparable college types. We find this differential increase in less-than-two-year for-profit college enrollment to be remarkably general across demographic characteristics, and robust to controlling for confounders such as the differential impact of the Great Recession. |
| Keywords: | affordable care act; postsecondary education; for-profit schools; health insurance; Medicaid |
| JEL: | H4 I1 I2 |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:873&r=ias |
| By: | Rujiwattanapong, W. Similan |
| Abstract: | This paper quantifies the effects of the increasing maximum unemployment insurance (UI) duration during recessions on the drop in the correlation between output and labour productivity in the U.S. since the early 1980’s - the so-called productivity puzzle. Using a general equilibrium search and matching model with stochastic UI duration, heterogeneous match quality, variable search intensity and on-the-job search, I demonstrate that the model can explain over 40 percent of the drop in this correlation (28 percent when the Great Moderation is taken into account). More generous UI extensions during recent recessions cause workers to be more selective with job offers and lower job search effort. The former channel raises the overall productivity in bad times. The latter prolongs UI extensions since in the U.S. they are triggered by high unemployment. |
| Keywords: | business cycles; labour productivity; unemployment insurance |
| JEL: | E32 J24 J64 J65 |
| Date: | 2018–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90872&r=ias |
| By: | Sharma, S.; Walters, C. |
| Abstract: | At the beginning of each agricultural cycle producers face risks from uncertain harvest yields and prices. To assist in managing these risks the federal government offers subsidized crop insurance. Since the 1996 Farm Act, crop insurance has been the cornerstone of risk management. In 2015, federal crop insurance represented over $9.5 billion in premiums and $102 billion in liabilities, compared to only $1.8 billion dollars in premiums and $26 billion in liabilities in 1996 (Risk Management Agency (RMA)). While the premium rate tailoring by the RMA is aimed at improving actuarial performance, it may not be sufficient. That is, are there other farm characteristics that the insurer observes, which deserve consideration? For the producer, this could mean the opportunity for excess returns and for the insurance provider and the government, excess returns imply an inefficient program resulting in misallocation of scarce resources and increase in taxpayer cost. In this article, we empirically examine the impact of two specific farm characteristics, farm size and insured share on returns from crop insurance. Our results suggest that large producers are attaining higher crop insurance returns across regions and crops. Acknowledgement : |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277399&r=ias |
| By: | K.S. , A.; Khan, T.; Kishore, A. |
| Abstract: | Crop insurance is one of the important risk management strategies adopted by farmers. However, one of the biggest challenge Government faces while promoting insurance is in setting optimum premium for crop insurance which can achieve higher participation of farmers in Insurance programme. With premium rate set at 1.5% of sum insured for wheat crop, are the farmers are willing to pay the premium at this rate to insure their wheat crop? It would be interesting to investigate this question in state like Punjab which has not implemented crop insurance. We conducted a Contingent Valuation Study to elicit Willingness to Pay (WTP) for crop insurance of wheat farmers in Punjab state. The sample consisted of 617 wheat farmers spread across 60 villages of 12 districts in Punjab. We found that it is farmers who has suffered crop loss in the past found to have higher WTP. Asset worthy farmers, banking literacy, extension contact was also found to have positive impact on WTP. The study indicated that WTP for crop insurance is around Rs 297 / acre, which is less than the existing rate of premium which is approximately Rs. 400 /acre (premium rate of 1.5%). Acknowledgement : |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277516&r=ias |
| By: | Le, Nga (UNU-MERIT); Groot, Wim (UNU-MERIT and CAPHRI, Maastricht University,); Tomini, Sonila (UNU-MERIT); Tomini, Florian (Institute of Epidemiology and Health Care, UCL Medical School) |
| Abstract: | Even though health insurance is expanding rapidly in Vietnam, its coverage is not effective. There remain inefficiencies in the healthcare system with quality concerns, especially at primary care and in remote areas. However, very little is known about how health insurance is valued by people and whether health insurance coverage can translate into quality healthcare. This paper investigates the relationship between health insurance and patient satisfaction with medical care in the poorest regions of Vietnam. We use multi-level models for ordinal responses on a cross-sectional dataset of the poorest regions of Vietnam in 2012. We find that it is not health insurance coverage per se but the financial coverage that matters to improve patient satisfaction with medical care. Patient satisfaction depends on the breadth and depth of insurance coverage (i.e. services and medicines covered, co-payment rate for each service) and the ability to use health insurance to reduce medical costs via the co-payment mechanism. |
| Keywords: | Health insurance, patient satisfaction, Vietnam |
| JEL: | I13 |
| Date: | 2018–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2018040&r=ias |
| By: | Owusu, V. |
| Abstract: | , preferences for crop insurance programs are closely linked to credit market imperfections. Understanding the credit constraints of small holder farmers and their attribute non-attendance in the preferences for crop insurance products provide better assessments of policy-relevant instruments needed to ensure participation in crop insurance policies and reduction of agricultural production risks in sub-Saharan Africa. We analyze farmers preferences for different non-indexed crop insurance alternatives using Discrete Choice Experiment (DCE) data on cocoa farmers from southern Ghana, whilst recognizing the endogeneity of attribute non-attendance (ANA) of the respondents in the choice tasks, and the impact of liquidity constraints on farmers choice for the crop insurance products in the ANA framework. The results indicate that credit-constrained farmers attend more to premium and payment mode attributes of the crop insurance products, and that credit-constrained farmers tend to exhibit lower willingness to pay (WTP) estimates for the crop insurance attributes. We provide fruitful policy recommendations in the paper. Acknowledgement : The author thanks the Alexander von Humboldt Foundation for financial support for the study. |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:276967&r=ias |
| By: | Vroege, W.; Dalhaus, T.; Finger, R. |
| Abstract: | Index insurance schemes have been proposed as an alternative to overcome problems of asymmetric information and transaction costs when insuring agriculture with traditional indemnity-based insurances, and to allow to insure usually uninsurable land use forms such as pastures. It has been advocated that insurances based on variables highly correlating with, but independent of, the production at the farm have a particularly high potential to insure grasslands. We aim to shed light on the supply, diversity and uptake of index-based insurances for grassland production in developed countries. More specifically, this review provides a classification of grassland index insurance products, thereby incorporating the increasing possibilities of satellite imagery. It discusses ten grassland index insurance products that are on the market, summarizes their characteristics and discusses their strengths and weaknesses. A complete and verified overview was achieved by including systematizing expert interviews. Lastly, it targets to critically asses the different types of index insurances and provides an outlook on future developments. Acknowledgement : |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277466&r=ias |
| By: | Purvi Sevak; Cara N. Stepanczuk; Katharine W.V. Bradley; Tim Day; Greg Peterson; Boyd Gilman; Laura Blue; Keith Kranker; Kate Stewart; Lorenzo Moreno |
| Abstract: | The purpose of this study was to test the effectiveness of a high-intensity care management program that the Rutgers University Center for State Health Policy (CSHP) implemented as an adaptation of a promising model developed by the Camden Coalition of Healthcare Providers. |
| Keywords: | community-based care management model, super utilizers, Camden Coalition |
| JEL: | I |
| URL: | http://d.repec.org/n?u=RePEc:mpr:mprres:5fc5a7b9ebd541a296ec1e9777aefb01&r=ias |
| By: | Ramon Alemany (Riskcenter-IREA, Department of Econometrics, Statistics and Applied Economy, Universitat de Barcelona); Mercedes Ayuso Gutiérrez (Riskcenter-IREA, Department of Econometrics, Statistics and Applied Economy, Universitat de Barcelona); Montserrat Guillen (Riskcenter-IREA, Department of Econometrics, Statistics and Applied Economy, Universitat de Barcelona) |
| Abstract: | Home and leisure accidents are one of the main causes of mortality due to other causes than aging, and have a high impact on health systems. However, to date, the number of studies associated with measuring their socioeconomic impact is very limited, unlike those associated with other causes such as traffic accidents or work accidents. Our objective is to analyze the long-term care needs associated with home and leisure accidents (HLA) in Spain. We conclude that the care needs derived from these causes increase with age of people, with a high incidence in all those situations in which people see their mobility limited. The high socioeconomic costs that result (approximately 781 million euros in 2016 in Spain for expenses in long-term care, 0.07% of the Gross Domestic Product) highlight the need to implement preventive policies. Taking into account the budgetary constraints that the public systems can have to address all costs, the development of insurance products that help to cover these specific situations could be justified. |
| Keywords: | Social care, expenditure on long-term care, preventive actions |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:bak:wpaper:201803&r=ias |
| By: | Dalhaus, T.; Finger, R. |
| Abstract: | Crop insurances play a key role in managing farmers financial exposure to climate risks. Recent developments have shown that weather index insurances (WII) help to overcome problems of asymmetric information in classical indemnity based crop insurances. However, basis risk, i.e. the discrepancy between WII payout and on-farm losses, constitutes the largest adoption hurdle to overcome. Currently, rich farm-level yield records are indispensable to design functioning WII contracts. Thus, farmers remain mostly unprotected in case of farm-level yield data scarcity. We here develop a Bayesian quantile regression (BQR) framework to reduce this type of basis. To this end, we use county-level yield data as informative prior for estimating the impact of farm-level rainfall on farm-level yields. We are thus able to combine the rich sources of county-level yield data with scarce data on the farm-level. We use an empirical example of insuring drought risk in Eastern German winter wheat production. Our results show that, although our approach helps to effectively reduce farmers financial exposure to drought risk, basis risk remains unaffected in our case study context. Further research might expand the here proposed BQR to other perils with higher spatial dependence and regions with longer records of county yields. Acknowledgement : |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277226&r=ias |
| By: | Christian Wei{\ss}; Zoran Nikoli\'c |
| Abstract: | Practitioners sometimes suggest to use a combination of Sobol sequences and orthonormal polynomials when applying an LSMC algorithm for evaluation of option prices or in the context of risk capital calculation under the Solvency II regime. In this paper, we give a theoretical justification why good implementations of an LSMC algorithm should indeed combine these two features in order to assure numerical stability. Moreover, an explicit bound for the number of outer scenarios necessary to guarantee a prescribed degree of numerical stability is derived. We embed our observations into a coherent presentation of the theoretical background of LSMC in the insurance setting. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1811.08509&r=ias |
| By: | Patil, V.; Veettil, P.C. |
| Abstract: | Covariate production risks are some of the central features of the agriculture sector especially in developing countries that merit further economic research. Risk attitudes of the farmers play a crucial role in designing and targeting mechanisms to mitigate risks. As a part of our larger research project towards developing a comprehensive crop insurance product, we conduct risk preferences elicitation experiment with rice-growing farmers in eastern India. The experiment is relatively unique in that it introduces a minimum entry fee which help in eliciting risk preferences that are close to their behaviour in real decision makings. Using zero-inflated ordered probit mode, we analysed the experimental data. The results show that small and marginal farmers tend to opt for options associated with high risk aversion. As majority of the farmers in the sampled states have small and marginal landholdings, in general farmers tend to be risk averse. In addition, compared to young farmers, elder farmers are found to be more risk averse. Education and household size of respondents have also positive effect on riskier options and negative effect on risk averse options. Farmers who belong to minority caste/social class (SC and ST) are more likely to opt the risk aversion strategy. Acknowledgement : |
| Keywords: | Risk and Uncertainty |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277331&r=ias |
| By: | Josephson, A. |
| Abstract: | Studies of intra-household resource allocation have typically omitted income earned jointly, by two or more individuals. To explore this important dynamic, I empirically test the assumption that all household income is pooled, when joint income, as well as income earned individually by men and women, is accounted for in the analysis. I develop a collective intra-household model which explicitly includes joint and individual relationships to explain income allocation. Exogenous variation in rainfall is used to examine if households pool resources and insure one another against income shocks, resulting from these rainfall shifts. I reject the hypothesis of complete income pooling and full insurance within the household. However, I find evidence that households members pool income and insure one another for expenditures on essential goods. Conversely, they do not pool income and do not insure one another for luxury goods. I conclude that there is strategic income pooling behavior with respect to particular types of expenditure. These results are contrary to previous studies, which fail to find even partial insurance for essential goods within households. The conclusions of this study provide a novel perspective on intra-household dynamics which highlight the need to consider joint relationships in household analyses. Acknowledgement : |
| Keywords: | Labor and Human Capital |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277183&r=ias |
| By: | Jeroen (J.) Hinloopen (University of Amsterdam); Lting Zhou (Tinbergen Institute) |
| Abstract: | We formally link insurance markets with product markets and identify a demand effect of insurance: if risk-averse consumers can buy insurance against possible product failure, there will be some additional consumers that buy the product because they can also purchase protection. The concomitant upward pressure on price is further fueled by those consumers that have a higher willingness to pay if they can also buy insurance. But a higher price causes those consumers to leave the market that would have bought the product absent insurance. Introducing insurance thus has an ambiguous effect on price, consumers' surplus, and total surplus. |
| Keywords: | product failure; insured loss; insurance; product markets; demand effect of insurance |
| JEL: | D21 D43 L13 |
| Date: | 2018–11–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20180090&r=ias |
| By: | Cyril B\'en\'ezet; J\'er\'emie Bonnefoy; Jean-Fran\c{c}ois Chassagneux; Shuoqing Deng; Camilo Garcia Trillos; Lionel Len\^otre |
| Abstract: | In this work, we present a numerical method based on a sparse grid approximation to compute the loss distribution of the balance sheet of a financial or an insurance company. We first describe, in a stylised way, the assets and liabilities dynamics that are used for the numerical estimation of the balance sheet distribution. For the pricing and hedging model, we chose a classical Black & Scholes model with a stochastic interest rate following a Hull & White model. The risk management model describing the evolution of the parameters of the pricing and hedging model is a Gaussian model. The new numerical method is compared with the traditional nested simulation approach. We review the convergence of both methods to estimate the risk indicators under consideration. Finally, we provide numerical results showing that the sparse grid approach is extremely competitive for models with moderate dimension. |
| Date: | 2018–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1811.08706&r=ias |
| By: | Liu, Y.; Ker, A. |
| Abstract: | County crop yield data from USDA-NASS are extensively used in the literature as well as practice. In many applications, yield data are adjusted for the first two moments then assumed independent and identically distributed. For most major crop-region combinations, yield data exist from 1955 onwards and reflect significant innovations in both seed and farm management technologies. These innovations have likely changed the yield distribution raising doubt regarding the identically distributed assumption. We consider the question of how much historical yield data should be used in empirical analyses. First, we use distributional tests to assess if and when the adjusted yield data result from different DGPs. Second, we consider the application to crop insurance by using an out-of-sample rating. Third, we estimate DGPs and then simulate to quantify the additional error. Overall, the results indicate that using yield data more than 30 years old can substantially increase estimation error. Given that discarding data is unappetizing, we propose three methodologies that can re-incorporate the discarded data. Our results suggest gains in efficiency by using these methodologies. While our results are most applicable to the crop insurance literature, we certainly feel they suggest proceeding with caution when using historical yield data in other applications. Acknowledgement : |
| Keywords: | Crop Production/Industries |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:277293&r=ias |
| By: | Jiri Rotschedl (University of Economics, Prague) |
| Abstract: | The paper deals with the economics of obesity and consumer decision-making. This paper aims to suggest measures to reduce obesity. The author links economics and some other scientific disciplines, for example, physiology, endocrinology, genetics, etc. Three economic case studies show how all these disciplines play a crucial role in the causes of obesity. Based on the economic case studies, the author suggests the "treatment" of obesity. It includes 1) the tax on unhealthy food (artificial sugar or fructose syrup); 2) sports subsidies or support of sport by public health insurance; and 3) restriction on the use of antibiotics. A secondary result of the paper is that individual preferences are not stable due to the changeable set of body and processes inside. |
| Keywords: | Economic theory, obesity, fructose syrup, Ghrelin, Leptin, economic approach |
| JEL: | D11 I19 L66 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:7109891&r=ias |