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on Insurance Economics |
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Issue of 2021‒03‒08
eleven papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Emmanuel Coffie; Sindre Duedahl; Frank Proske |
| Abstract: | In modern life insurance, Markov processes in continuous time on a finite or at least countable state space have been over the years an important tool for the modelling of the states of an insured. Motivated by applications in disability insurance, we propose in this paper a model for insurance states based on Markov jump processes with more general state spaces. We use this model to derive a new type of Thiele's differential equation which e.g. allows for a consistent calculation of reserves in disability insurance based on two-parameter continuous time rehabilitation rates. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2102.10047&r=all |
| By: | Gaetano Gaballo; Guillermo Ordoñez |
| Abstract: | In absence of insurance contracts to share risk, public information is a double-edged sword. On the one hand, it empowers self-insurance as agents better react to shocks, reducing risk. On the other hand, it weakens market-insurance as common knowledge of shocks restricts trading risk. We embody these two faces of information in a single general-equilibrium model. We characterize the conditions under which market-insurance is superior, and then public information – even though costless and precise – is socially undesirable. In the absence of information, however, market-insurance is still underprovided as individuals fail to internalize its general equilibrium benefits. |
| JEL: | D52 D53 D62 D8 E21 G11 G12 G14 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28489&r=all |
| By: | Susniwati, Susniwati |
| Abstract: | Bandung is one of 4 (four) districts in West Java that have received Universal Health Coverage (UHC) with more than 95% participation as of January 1, 2018. In the implementation of the JKN program in Bandung, there are still some obstacles, namely collaboration between the main actors of the program has not been implemented and the lack of information socialization to the community. The purpose of this article is to analyze collaborative governance in the implementation of the JKN program in Bandung. The research method used is a descriptive method with a qualitative approach. Data collection techniques using observation, in-depth interviews, and documentation study. The results of research on collaborative governance in the implementation of the JKN program in Bandung on the dimensions of the context system that houses the JKN Program in Bandung. The implementation of the JKN program in Bandung requires improving accountability function and role sharing between various sectors involved. The dimensions of the collaborative governance regime consist of the dynamics of collaboration and collaboration action between the relevant stack holders. Collaboration between stakeholders has not been optimal, there is still a lot of obscurity in the data request process. Collaboration between stakeholders is difficult due to the fragmentation of national, regional, and health systems. The third dimension of collaboration dynamics consisting of 3 (three) components namely principle engagement, shared motivation, and capacity for joint action needs to improve information socialization so that the equalization of health services through the JKN program can be implemented to the maximum. |
| Date: | 2020–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:w8kxc&r=all |
| By: | Freeman, Richard B. (Harvard University); Huang, Wei (National University of Singapore); Li, Teng (National University of Singapore) |
| Abstract: | Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents in a highly non-linear incentive system, we find that the improvement in productivity far outweighed the costs associated with bunching distortions and other gaming behaviors. Labor turnover decreased, which suggests that the extra pay for workers exceeded the non-pecuniary cost of extra effort by workers, and thus improved their well-being. The firm gained about two-thirds of the higher net output, making the reform profitable. Analysis of non-linear incentive systems should accordingly focus more on the productivity-enhancing than on the distortionary effects. |
| Keywords: | non-linear incentives, insurance commission, strategic gaming behavior, productivity, turnover rates |
| JEL: | J33 M52 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14125&r=all |
| By: | Antonio Cabrales (Dept. of Economics, Universidad Carlos III de Madrid); Irma Clots-Figueras (School of Economics, University of Kent); Roberto Hernán-González (Burgundy School of Business); Praveen Kujal (Dept. of Economics, Business School, Middlesex University) |
| Abstract: | Risk mitigating institutions have long been used by societies to protect against opportunistic behavior. We know little about how they are demanded, who demands them or how they impact subsequent behavior. To study these questions, we run a large-scale online experiment where insurance can be purchased to safeguard against opportunistic behavior. We compare two different selection mechanisms for risk mitigation, the individual and the collective (voting). We find that, whether individual or collective, there is demand for riskmitigating institutions amongst high-opportunism individuals, while low-opportunism individuals demand lesser levels of insurance. However, high-opportunism individuals strategically demand lower insurance institutions when they are chosen collectively through voting. We also find that the presence of risk mitigating institutions crowds out reciprocity. Reciprocity is lower when the no-insurance option is chosen among other insurance options than when it is not available. Finally, we also observe higher gains from exchange in lowopportunism groups than in more opportunistic ones. |
| Keywords: | institutions; trust; trustworthiness; voting; insurance |
| JEL: | C92 D02 D64 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:21-05&r=all |
| By: | Nicolás de Roux; Nicola Limodio |
| Abstract: | We exploit a large and unexpected increase in the Colombian insurance threshold to investigate how depositors respond to higher deposit insurance. Monthly depositor-level records from a major bank show that the level and growth rate of deposits rise with higher coverage. Individuals who were fully and nearly-fully insured before the policy drive this increment. A survey of bank customers indicates that higher deposits were replenished by lowering cash and other assets. We estimate an elasticity of deposit growth to deposit insurance of 0.4%, and fi nd a similar fi gure in the United States by leveraging the 2008 increase in deposit insurance. |
| Keywords: | Banking, Financial Regulation, Household Saving. |
| JEL: | G21 G28 G51 |
| Date: | 2021–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:018800&r=all |
| By: | Miki Miyaki (Chuo University, Faculty of Economics); Nobuo Akai (Osaka School of International Public Policy, Osaka University) |
| Abstract: | This study examines economies of scale in public primary and junior high school education focusing on expense categories applying fixed effect analysis to the prefecture-level panel data from the period of FY1980 to FY2016. The estimation results show that there are economies of scale over total ordinary expenditure, personnel expenditure, administrative expenditure, sub activity expenditure (only in primary school) and insurance expenditure. The cost elasticity of the number of students found to be larger in administrative and insurance expenditures than in personnel expenditure. These results remain to be the same even after controlling for the effect of class size on the cost, which implies that in time of declining birthrates, maintaining or expanding class size could achieve financial efficiency. Moreover, after the amendment of the Act on Standards for Class Formation and Fixed Number of School Personnel of Public Compulsory Education Schools in FY2001, since each local government became to be more responsible to decide class size, the magnitude of economies of scale tends to becoming larger. |
| Keywords: | economies of scale, public education, expense categories |
| JEL: | C33 H52 H75 I22 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:osp:wpaper:21j005&r=all |
| By: | Peter Eibich (Max Planck Institute for Demographic Research, Rostock, Germany) |
| JEL: | J1 Z0 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2021-005&r=all |
| By: | Joonbae Lee; Hanna Wang |
| Abstract: | This paper studies the relationship between search effort and workers’ ranking by employers. We propose a matching model in which employers’ common preferences over a continuum of heterogeneous workers affect the number of applications each worker sends out. We show that in equilibrium, the relationship is hump-shaped for sufficiently high vacancy-to-worker ratios, that is highly-ranked and lowly-ranked workers send out fewer applications than workers of mid-range rank. This arises due to two opposing forces driving the incentive of applicants. Increasing the number of applications acts as insurance against unemployment, but is less effective when the probability of success for each application is low. This mechanism exacerbates the negative employment outcomes of low-rank workers. We discuss comparative statics with regards to the size of the vacancy pool and application cost, and show that, in contrast to the market equilibrium, in the solution of the social planner the number of applications are monotonously decreasing in rank. |
| Keywords: | simultaneous search, search effort, worker heterogeneity |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1242&r=all |
| By: | Gregor Jarosch |
| Abstract: | Job loss comes with large present value earnings losses which elude workhorse models of unemployment and labor market policy. I propose a parsimonious model of a frictional labor market in which jobs differ in terms of unemployment risk and workers search off- and on-the-job. This gives rise to a job ladder with slippery bottom rungs where unemployment spells beget unemployment spells. I allow for human capital to respond to time spent out of work and estimate the framework on German Social Security data. The model captures the joint response of wages, employment, and unemployment risk to job loss which I measure empirically. The key driver of the “unemployment scar” is the loss in job security and its interaction with the evolution of human capital. |
| JEL: | E24 J3 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28481&r=all |
| By: | Atul Gupta; Sabrina T. Howell; Constantine Yannelis; Abhinav Gupta |
| Abstract: | The past two decades have seen a rapid increase in Private Equity (PE) investment in healthcare, a sector in which intensive government subsidy and market frictions could lead high-powered for-profit incentives to be misaligned with the social goal of affordable, quality care. This paper studies the effects of PE ownership on patient welfare at nursing homes. With administrative patient-level data, we use a within-facility differences-in-differences design to address non-random targeting of facilities. We use an instrumental variables strategy to control for the selection of patients into nursing homes. Our estimates show that PE ownership increases the short-term mortality of Medicare patients by 10%, implying 20,150 lives lost due to PE ownership over our twelve-year sample period. This is accompanied by declines in other measures of patient well-being, such as lower mobility, while taxpayer spending per patient episode increases by 11%. We observe operational changes that help to explain these effects, including declines in nursing staff and compliance with standards. Finally, we document a systematic shift in operating costs post-acquisition toward non-patient care items such as monitoring fees, interest, and lease payments. |
| JEL: | G3 G32 G34 G38 I1 I18 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28474&r=all |