nep-ias New Economics Papers
on Insurance Economics
Issue of 2020‒10‒05
twenty-two papers chosen by
Soumitra K. Mallick
Indian Institute of Social Welfare and Business Management

  1. A Path Analysis Examining the Relationship Between Access Barriers to Health Services and Healthcare Utilization Among the Publicly Insured: Insights from a Multiprovince Survey in the Philippines By Alipio, Mark
  2. Out of the Woodwork: Enrollment Spillovers in the Oregon Health Insurance Experiment By Adam Sacarny; Katherine Baicker; Amy Finkelstein
  3. Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates? By Sujeong Park; David Powell
  4. Choice in Insurance Markets: A Pigouvian Approach to Social Insurance Design By Nathaniel Hendren; Camille Landais; Johannes Spinnewijn
  5. Redistribution and Insurance in Welfare States around the World By Bartels, Charlotte; Neumann, Dirk
  6. Building climate resilience through social protection in Brazil: the Garantia Safra public climate risk insurance programme By Elena Kühne
  7. Forgivable Premium: Strategy for Lowering Crop Insurance Subsidies By Jore, Kyle; Bozic, Marin
  8. Crowding-Out or Crowding-In? Heterogeneous Effects of Insurance on Solidarity By Landmann, Andreas; Vollan, Björn; Henning, Karla; Frölich, Markus
  9. Agricultural input use and index insurance adoption: Concept and evidence By Arora, Gaurav; Agarwal, Sandip K.
  10. Implications of U.S. Crop Insurance -- A Perspective from Copulas By Zhang, Yifei; Goodwin, Barry K.
  11. Suitability of index insurance: new insights from satellite data By Stigler, Matthieu M.; Lobell, David
  12. Utilizing the Dual Use Insurance Option for Stocker Cattle By Oerly, Amber K.; Johnson, Myriah D.
  13. Examining the effects of federal crop insurance premium subsidies on allocative and technical inefficiency in the U.S. cornbelt By Njuki, Eric
  14. Utilizing Topographic and Soil Features to Improve Rating for Farm-Level Insurance Products By Tsiboe, Francis; Tack, Jesse B.
  15. On Option Greeks and Corporate Finance By Chang, Kuo-Ping
  16. Does Unemployment Risk Affect Business Cycle Dynamics? By Sebastian Graves
  17. Effects of Public Health Insurance Expansions on Consumption Expenditures of Targeted Households By Panchalingam, Thadchaigeni
  18. Physician altruism and moral hazard: (no) evidence from Finnish national prescriptions data By Crea, Giovanni; Galizzi, Matteo M.; Linnosmaa, Ismo; Miraldo, Marisa
  19. Interactions in Public Policies: Spousal Responses and Program Spillovers of Welfare Reforms By Johnsen, Julian Vedeler; Willén, Alexander; Vaage, Kjell
  20. Non-Random Exposure to Exogenous Shocks: Theory and Applications By Kirill Borusyak; Peter Hull
  21. US Unemployment Insurance Replacement Rates During the Pandemic By Peter Ganong; Pascal Noel; Joseph Vavra
  22. Launching with a Parachute: The Gig Economy and Entrepreneurial Entry By John M. Barrios; Yael V. Hochberg; Hanyi Yi

  1. By: Alipio, Mark
    Abstract: Although the National Health Insurance Act (NHIA) of 2013 has been widely successful in expanding coverage, insurance alone may not translate into access to quality healthcare for everyone. Even among the insured, substantial barriers to accessing services inhibit health care utilization. This study was focused on examining the influence of selected health services access barriers to the healthcare utilization among the publicly insured residents in the Philippines. A cross-sectional survey was conducted with a sample of 7,234 Filipino residents chosen using multi-stage cluster sampling. Path analysis was used to determine the connections among the study variables. Descriptive analysis revealed that the respondents always perceive approachability and ability to reach as supply-side and demand-side access barriers, respectively, among others. Correlation analysis revealed that supply-side and demand-side access barriers to care and the healthcare utilization of the respondents are positively interrelated from each other, suggesting that respondents who always perceive the mentioned factors as access barrier to care utilize low level of healthcare services for the past three months. A further path analysis was conducted and revealed that the supply-side determinant with the largest total causal effect on healthcare utilization is approachability while the demand-side determinant with the largest total causal effect is ability to reach. The findings showed better fit of the conceptual model in predicting healthcare utilization. Approximately 93% of the variance in the healthcare utilization is explained by the model. The results of the study may enable policy makers and health planners to identify the different dimensions and aspects of barriers to access to health services, and to devise specific interventions or combination of interventions that can best address these barriers.
    Date: 2020–03–01
  2. By: Adam Sacarny (Columbia University and NBER); Katherine Baicker (Harris School of Public Policy, University of Chicago); Amy Finkelstein (Department of Economics, Massachusetts Institute of Technology)
    Abstract: We analyze the impact of expanded adult Medicaid eligibility on the Medicaid enrollment of already-eligible children. To do so, we exploit the 2008 Oregon Medicaid lottery, in which some low-income uninsured adults were randomly selected for the chance to apply for Medicaid. Children in these households were eligible for Medicaid irrespective of whether the household won the lottery. We estimate statistically significant but transitory impacts of adult lottery selection on childrenÕs Medicaid enrollment: for every9 adults who enroll in Medicaid due to the lottery, one additional child also enrolls at the same time. Our results shed light on the existence, magnitude, and nature of so-called Òwoodwork effectsÓ.
    JEL: H53 I13 I38
    Date: 2020
  3. By: Sujeong Park; David Powell
    Abstract: There is considerable interest in understanding the broader effects of the opioid crisis on labor supply and social insurance programs in the United States. This paper examines how the recent transition of the opioid crisis from prescription opioids to more prevalent misuse of illicit opioids, such as heroin and fentanyl, altered labor supply behavior and disability insurance claiming rates. We exploit differential geographic exposure to the reformulation of OxyContin, the largest reduction in access to abusable prescription opioids to date, to study the effects of substitution to illicit markets. We observe meaningful reductions in labor supply measured in terms of employment-to-population ratios, hours worked, and earnings. We also find significant increases in disability applications and beneficiaries. These labor supply and disability insurance shifts begin immediately after reformulation and are uniquely associated with pre-reformulation rates of OxyContin misuse, not rates of broader pain reliever misuse.
    JEL: J22 H55 I12
    Date: 2020–09
  4. By: Nathaniel Hendren; Camille Landais; Johannes Spinnewijn
    Abstract: Should choice be offered in social insurance programs? The paper presents a conceptual framework that identifies the key forces determining the value of offering choice, reviews some existing evidence on these forces, and aims to guide further empirical research in different in- surance domains. The value of offering choice is higher the larger the variation in individual valuations, but gets reduced by both selection on risk and selection on moral hazard. The imple- mentation of choice-based policies is further challenged by the presence of adverse selection and choice frictions or the obligation to offer basic uncompensated care. These inefficiencies can be seen as externalities, which do not rationalize the absence of providing choice per se, but point to the need for regulatory policies and the potential value of corrective pricing à la Pigou.
    JEL: H0
    Date: 2020–09
  5. By: Bartels, Charlotte (DIW Berlin); Neumann, Dirk (Bundesministerium für Wirtschaft und Energie)
    Abstract: Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective, reducing the level of actual redistribution across individuals. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, South Korea, Switzerland, the United Kingdom, and the United States, we find that welfare states like Germany that are assumed to engage in a high level of redistribution actually achieve relatively less redistribution between individuals in the long run than the United Kingdom or the United States. Regression results show that a higher share of elderly in a country is associated with more annual redistribution, but with less long-run redistribution between individuals. The results suggest that, in welfare states with aging populations, we might expect growing annual redistribution that, to a substantial extent, is in fact income smoothing for the elderly.
    Keywords: welfare states, redistribution, insurance
    JEL: D31 D63 H53 H55 I38
    Date: 2020–09
  6. By: Elena Kühne (IPC-IG)
    Abstract: This Policy Research Brief examines social protection's role in building climate resilience based on evidence from the Garantia Safra programme, a public index-based climate risk insurance scheme in Brazil.
    Keywords: protection; resilience; climate change adaptation; disaster risk management; climate risk insurance; smallholders; rural development; Garantia Safra
    Date: 2020–08
  7. By: Jore, Kyle; Bozic, Marin
    Keywords: Risk and Uncertainty, Agricultural and Food Policy, Institutional and Behavioral Economics
    Date: 2020–07
  8. By: Landmann, Andreas (University of Erlangen-Nuremberg); Vollan, Björn (University of Marburg); Henning, Karla (KfW Development Bank); Frölich, Markus (University of Mannheim)
    Abstract: We analyze whether the availability of formal insurance products affects informal solidarity transfers in two independent behavioral experiments in the Philippines. The first experiment allows for communication, non-anonymity and unrestricted transfers. The second experiment mimics a laboratory setting without communication and preserves anonymity, which minimizes strategic concerns. The introduction of an insurance treatment alters solidarity in both experiments. We find crowding-out effects in the first setting with strategic motives, while there are even crowding-in effects due to insurance availability in the anonymous experiment. These and additional supporting results are in line with crowding-out of strategic, but not necessarily intrinsic motives due to the availability of insurance.
    Keywords: insurance, solidarity, crowding effects, lab-in-the-field experiment, Philippines
    JEL: O12 Z13
    Date: 2020–09
  9. By: Arora, Gaurav; Agarwal, Sandip K.
    Keywords: Risk and Uncertainty, Production Economics, Agricultural and Food Policy
    Date: 2020–07
  10. By: Zhang, Yifei; Goodwin, Barry K.
    Keywords: Risk and Uncertainty, Agricultural and Food Policy, Agricultural Finance
    Date: 2020–07
  11. By: Stigler, Matthieu M.; Lobell, David
    Keywords: Agricultural Finance, Production Economics, Industrial Organization
    Date: 2020–07
  12. By: Oerly, Amber K.; Johnson, Myriah D.
    Keywords: Agricultural and Food Policy, Production Economics, Risk and Uncertainty
    Date: 2020–07
  13. By: Njuki, Eric
    Keywords: Productivity Analysis, Production Economics, Agricultural and Food Policy
    Date: 2020–07
  14. By: Tsiboe, Francis; Tack, Jesse B.
    Keywords: Production Economics, Risk and Uncertainty, Agricultural and Food Policy
    Date: 2020–07
  15. By: Chang, Kuo-Ping
    Abstract: This paper has proposed new option Greeks and new upper and lower bounds for European and American options. It also shows that because of the put-call parity, the Greeks of put and call options are interconnected and should be shown simultaneously. In terms of the theory of the firm, it is found that both the Black-Scholes-Merton and the binomial option pricing models implicitly assume that maximizing the market value of the firm is not equivalent to maximizing the equityholders’ wealth. The binomial option pricing model implicitly assumes that further increasing (decreasing) the promised payment to debtholders affects neither the speed of decreasing (increasing) in the equity nor the speed of increasing (decreasing) in the insurance for the promised payment. The Black-Scholes-Merton option pricing model, on the other hand, implicitly assumes that further increasing (decreasing) in the promised payment to debtholders will: (1) decrease (increase) the speed of decreasing (increasing) in the equity though bounded by upper and lower bounds, and (2) increase (decrease) the speed of increasing (decreasing) in the insurance though bounded by upper and lower bounds. The paper also extends the put-call parity to include senior debt and convertible bond. It is found that when the promised payment to debtholders is approaching the market value of the firm and the risk-free interest rate is small, both the owner of the equity and the owner of the insurance will be more reluctant to liquidate the firm. The lower bound for the risky debt is: the promised payment to debtholders is greater or equal to the market value of the firm times one plus the risk-free interest rate.
    Keywords: The put-call parity, option Greeks, the binomial option pricing model, risk level of debt.
    JEL: G13 G3 G32
    Date: 2020–07–30
  16. By: Sebastian Graves
    Abstract: In this paper, I show that the decline in household consumption during unemployment spells depends on both liquid and illiquid asset positions. I also provide evidence that unemployment spells predict the withdrawal of illiquid assets, particularly when households have few liquid assets. Motivated by these findings, I embed endogenous unemployment risk in a two-asset heterogeneous-agent New Keynesian model. The model is consistent with the above evidence and provides a new propagation mechanism for aggregate shocks due to a flight-to-liquidity that occurs when unemployment risk rises. This mechanism implies that unemployment insurance plays an important role as an automatic stabilizer, particularly when monetary policy is constrained.
    Keywords: Heterogeneous-agent model; liquid and illiquid assets; Unemployment insurance; Unemployment risk
    JEL: E10 E24 E32 E62 J64
    Date: 2020–09–18
  17. By: Panchalingam, Thadchaigeni
    Keywords: Institutional and Behavioral Economics, Food Consumption/Nutrition/Food Safety, Research Methods/Statistical Methods
    Date: 2020–07
  18. By: Crea, Giovanni; Galizzi, Matteo M.; Linnosmaa, Ismo; Miraldo, Marisa
    Abstract: We test the physicians’ altruism and moral hazard hypotheses using a national panel register containing all 2003-2010 statins prescriptions in Finland. We estimate the likelihood that physicians prescribe generic versus branded versions of statins as a function of the shares of the difference between what patients have to pay out of their pocket and what is covered by the insurance, controlling for patient, physician, and drug characteristics. We find that the estimated coefficients and the average marginal effects associated with moral hazard and altruism are nearly zero, and are orders of magnitude smaller than the ones associated with other explanatory factors such as the prescriptions’ year and the physician specialization. When the analysis distinctly accounts for both the patient and the insurer shares of expenditure, the estimated coefficients directly reject the altruism and moral hazard hypotheses. Instead, we find strong and robust evidence of habits persistence in prescribing branded drugs.
    Keywords: pharmaceuticals; moral hazard; physician altruism; habits persistence
    JEL: D64 I11
    Date: 2019–05–01
  19. By: Johnsen, Julian Vedeler (Center for Applied Research); Willén, Alexander (Dept. of Economics, Norwegian School of Economics and Business Administration); Vaage, Kjell (University of Bergen)
    Abstract: Anticipating the labor market effects of welfare reforms is difficult due to public policy interactions across programs and among household members. Specifically, changes to one program may affect individual take-up of other programs, and individual participation in specific programs may generate labor market responses from other household members. This paper exploits an early retirement reform in Norway to provide new insights into these interactions. We first show that the reform had a substantial impact on the labor supply of those individuals who were directly affected by the reform, reducing the probability of employment by more than 30 percent. We then demonstrate that the increased take-up of early retirement had an offsetting effect on the take-up of alternative social security programs. Next, we reveal that the reform had a negative indirect impact on the labor supply of spouses of individuals directly affected by the reform, with an effect size of 5.5 percent. Finally, we show that the indirect effect on spousal labor force participation is accompanied by a significant increase in spousal take-up of disability insurance. We conclude that neglecting how public policies interact across both programs and household members can result in a miscalculation of the total impact of welfare reforms.
    Keywords: Public Policy; Welfare Reform; Early Retirement
    JEL: H55 J14 J18 J26
    Date: 2020–09–23
  20. By: Kirill Borusyak; Peter Hull
    Abstract: We develop new tools for causal inference in settings where exogenous shocks affect the treatment status of multiple observations jointly, to different extents. In these settings researchers may construct treatments or instruments that combine the shocks with predetermined measures of shock exposure. Examples include measures of spillovers in social and transportation networks, simulated eligibility instruments, and shift-share instruments. We show that leveraging the exogeneity of shocks for identification generally requires a simple but nonstandard recentering, derived from the specification of counterfactual shocks that might as well have been realized. We further show how specification of counterfactual shocks can be used for finite-sample inference and specification tests, and we characterize the recentered instruments that are asymptotically efficient. We use this framework to estimate the employment effects of Chinese market access growth due to high-speed rail construction and the insurance coverage effects of expanded Medicaid eligibility.
    JEL: C21 C26 F14 I13 R40
    Date: 2020–09
  21. By: Peter Ganong (University of Chicago); Pascal Noel (University of Chicago - Booth School of Business); Joseph Vavra (University of Chicago - Booth School of Business)
    Abstract: We study the effects of news coverage of COVID-19 by the two most widely-viewed cable news shows in the United States ÑHannity and Tucker Carlson Tonight, both on Fox News Ñ on viewersÕ behavior and downstream health outcomes. Carlson warned viewers about the threat posed by COVID-19 from early February, while Hannity originally dismissed the associated risks before gradually adjusting his position starting late February. We first validate these differences in content with independent coding of show transcripts and present new survey evidence that HannityÕs viewers changed behavior in response to COVID-19 later than other Fox News viewers, while CarlsonÕs viewers changed behavior earlier. We then document a robust association between viewership of Hannity relative to Tucker Carlson Tonight and COVID-19 cases and deaths, both through a selection-on-observables strategy and through a novel instrumental variable approach exploiting variation in when shows are broadcast relative to local Òprime-timeÓ viewing hours. We assess effect sizes through a simple epidemiological model and provide additional evidence that misinformation is an important mechanism driving the observed effects.
    Date: 2020
  22. By: John M. Barrios (Washington University); Yael V. Hochberg (Rice University and NBER); Hanyi Yi (Rice University)
    Abstract: The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income indownside states of the world, and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ride hailing in U.S. cities to examine the effect of the arrival of the gig economy on entrepreneurial entry. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex ante economic uncertainty regarding future wage levels and wage growth.
    JEL: L26 G39 O3
    Date: 2020

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