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on Insurance Economics |
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Issue of 2021‒11‒01
fifteen papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Mendicino, Caterina; Cavalcanti, Tiago; Antunes, Antonio; Peruffo, Marcel; Villamil, Anne |
| JEL: | E2 E5 G1 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc21:242407&r= |
| By: | Michele Fioretti (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Hongming Wang (Hitotsubashi University) |
| Abstract: | Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties. |
| Keywords: | Pay-for-Performance,Medicare Advantage,Risk Selection,Quality Ratings,Health Insurance Access |
| Date: | 2021–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03386584&r= |
| By: | Michael J. Dickstein; Kate Ho; Nathaniel D. Mark |
| Abstract: | In the United States, households obtain health insurance through distinct market segments. We explore the economics of this segmentation by comparing coverage provided through small employers versus the individual marketplace. Using data from Oregon, we find households with group coverage spend 26% less on covered health care than households with individual coverage yet face higher markups. We develop a model of plan choice and health spending to estimate preferences in both markets and evaluate integration policies. In our setting, pooling can both mitigate adverse selection in the individual market and benefit small group households without raising taxpayer costs. |
| JEL: | I11 I13 I18 L0 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29406&r= |
| By: | Heidi Allen; Katherine Baicker |
| Abstract: | Health insurance may play an important role not only in immediate access to care but in the management of chronic disease, which would have implications for long-run care needs as well as health outcomes. Such causal connections are often difficult to establish, but we use Oregon’s 2008 Medicaid lottery to assess the management of diabetes and asthma, as well as several markers of physical health. This analysis complements several prior studies by introducing new data elements and by analyzing chronically ill subpopulations. While we had previously found that having insurance increases the diagnosis and use of medication for diabetes, we show here that it does not significantly increase the likelihood of diabetic patients receiving recommended care such as eye exams and regular blood sugar monitoring, nor does it improve the management of patients with asthma. We also find no effect on measures of physical health including pulse, obesity, or blood markers of chronic inflammation. Effects of Medicaid on health care utilization appear similar for those with and without pre-lottery diagnoses of chronic physical health conditions. Thus, while Medicaid is an important determinant of access to care overall, it does not appear that Medicaid alone has detectable effects on the management of several chronic physical health conditions, at least over the first two years in this setting. However, sample limitations highlight the value of additional research. |
| JEL: | I1 I13 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29373&r= |
| By: | Zhang, Guangli (Sinquefield Center for Applied Economic Research, Saint Louis University) |
| Abstract: | This paper presents new evidence on how UI (Unemployment Insurance) benefit pay frequencies affect the job search behaviors of UI claimants in the United States. By exploiting quasi-experimental variations in states' benefit pay schedules, I find that switching from biweekly to weekly pay significantly increases UI claimants' unemployment durations. This observed effect can be partly rationalized by the more frequent end-of-the-month positive benefit shocks under weekly pay schedules. I conclude that the previously overlooked policy parameter, benefit pay frequency, has important effects on the job search behaviors of UI claimants. |
| Keywords: | unemployment insurance; natural experiment; benefit pay frequency |
| JEL: | H55 J65 |
| Date: | 2021–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sluecr:2021_003&r= |
| By: | Amarnath, Giriraj (International Water Management Institute); Malik, Ravinder Paul Singh (International Water Management Institute); Taron, Avinandan (International Water Management Institute) |
| Abstract: | This research report presents the first comprehensive framework of business models in terms of developing, marketing and scaling Index-based flood insurance (IBFI). The report evaluated ten case studies on agricultural insurance schemes (macro, meso and micro levels), globally, to develop public-private partnership business models for creating value (product development) and capturing value (product marketing). This report highlights four broad groups of interrelated factors that influence the uptake and scaling of agricultural insurance: (i) behavioral factors that influence farmers’ enthusiasm to invest in insurance; (ii) financial factors that stipulate governments’ willingness to provide financial support; (iii) legal and regulatory factors, which set ground rules for fair business and govern their adherence by stakeholders; and (iv) facilitating factors, including product design and development, business models, research and development, data availability, and awareness creation, which help ensure an efficient supply of insurance services. In summary, the report highlights the need for designing innovative IBFI and its potential benefits for uptake, and efforts for implementing IBFI as a potential risk transfer tool for comprehensive climate risk management among small-scale and marginal farmers. |
| Keywords: | flooding/resilience/agricultural insurance/crop insurance/livelihoods/developing countries/scaling/disaster risk management/risk transfer/business models/product development/marketing/public-private partnerships/stakeholders/state intervention/financial institutions/microfinance/smallholders/farmers/awareness raising/climate change/satellite observation/rivers/rain/flood damage/crop losses/compensation/subsidies/legal aspects/economic aspects/social aspects/drought/case studies |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:iwt:rerpts:h050608&r= |
| By: | Víctor González-Jiménez |
| Abstract: | I show that stochastic contracts are powerful motivational devices when agents distort probabilities. Stochastic contracts allow the principal to target probabilities that, when distorted by the agent, enhance the agent's motivation to exert effort on the delegated task. This novel source of incentives is absent in traditional contracts. A theoretical framework and an experiment demonstrate that stochastic contracts targeting small probabilities, and thus exposing the agent to a large degree of risk, generate higher performance levels than traditional contracting modalities. A result that contradicts the standard rationale that optimal contracts should feature a tradeoff between insurance and efficiency. This unintuitive finding is attributed to probability distortions caused by likelihood insensitivity - cognitive limitations that restrict the accurate evaluation of probabilities. |
| JEL: | C91 C92 J16 J24 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:vie2101&r= |
| By: | Hélène Benghalem (UNIL - Université de Lausanne); Pierre Cahuc (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Pierre Villedieu (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We ran a large randomized controlled experiment among about 150,000 recipients of unemployment benefits insurance in France in order to evaluate the impact of part-time unemployment benefits. We took advantage of the lack of knowledge of job seekers regarding this program and sent emails presenting the program. The information provision had a significant positive impact on the propensity to work while on claim, but reduced the unemployment exit rate, showing important lock-in effects into unemployment associated with part-time unemployment benefits. The importance of these lock-in effects implies that increasing the marginal tax rate on earnings from work while on claim in the neighborhood of its current level would not decrease labor supply and would decrease the expenditure net of taxes of the unemployment insurance agency. |
| Keywords: | Unemployment insurance,Part-time unemployment benefits,Lock-in effects,Unemployment duration |
| Date: | 2021–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03389159&r= |
| By: | Cherbonnier, Frédéric |
| Abstract: | We examine the provision of insurance against non-observable liquidity shocks for time-inconsistent agents who can privately store resources. When lack of self-control is strong enough, optimal contracts are similar to individual nancial accounts with remunerated savings and costly borrowing. The corresponding rate of return decreases with savings, which gives a theoretical rationale for pension accounts with decreasing incentive schemes, as implemented in most developed countries. Extending the model to an innite horizon, we show that, in the presence of repeated shocks, optimal contracts lead to impoverishment almost surely. Usury laws, capping interest rates, worsen this tendency to over-indebtedness for consumers with low risk aversion. By contrast, hidden storage constrains resource allocation for time-consistent agents, so that optimal contracts induce them to accumulate wealth. Those results show how lack of self-control changes the nature of optimal savings and borrowing instruments, with normative implications in terms of tax policy and credit regulation. |
| Keywords: | Time-inconsistency; self-control; mechanism design; insurance, over-indebtedness; retirement savings; consumer credit; credit regulation; saving incentives |
| JEL: | C61 C63 C73 D82 E21 H21 |
| Date: | 2021–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:tse:iastwp:126129&r= |
| By: | Cherbonnier, Frédéric |
| Abstract: | We examine the provision of insurance against non-observable liquidity shocks for time-inconsistent agents who can privately store resources. When lack of self-control is strong enough, optimal contracts are similar to individual nancial accounts with remunerated savings and costly borrowing. The corresponding rate of return decreases with savings, which gives a theoretical rationale for pension accounts with decreasing incentive schemes, as implemented in most developed countries. Extending the model to an innite horizon, we show that, in the presence of repeated shocks, optimal contracts lead to impoverishment almost surely. Usury laws, capping interest rates, worsen this tendency to over-indebtedness for consumers with low risk aversion. By contrast, hidden storage constrains resource allocation for time-consistent agents, so that optimal contracts induce them to accumulate wealth. Those results show how lack of self-control changes the nature of optimal savings and borrowing instruments, with normative implications in terms of tax policy and credit regulation. |
| Keywords: | Time-inconsistency; self-control; mechanism design; insurance, over-indebtedness; retirement savings; consumer credit; credit regulation; saving incentives |
| JEL: | C61 C63 D73 D82 E21 H21 |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:126131&r= |
| By: | International Monetary Fund |
| Abstract: | Since the prior FSAP the authorities have comprehensively updated the legal, policy and procedural framework for failing bank resolution. In 2019 both the NBG and Banking Laws were amended to provide the authorities with powers to resolve banks that in the past might have been deemed too-big-to-fail; this eventuality is now greatly diminished. In 2017 a Deposit Insurance System Law was adopted to provide protection to natural person depositors when a bank fails and is liquidated. In 2020 the NBG published a series of rules specifying its policies and procedures for the use of its new powers, and jointly with the MoF published regulations addressing the use of temporary public funding to mitigate the potential systemic implications of bank failures. |
| Date: | 2021–09–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2021/223&r= |
| By: | Caroline Hillairet (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Olivier Lopez (LPSM (UMR_8001) - Laboratoire de Probabilités, Statistiques et Modélisations - SU - Sorbonne Université - CNRS - Centre National de la Recherche Scientifique - UP - Université de Paris); Louise d'Oultremont; Brieuc Spoorenberg |
| Abstract: | In this paper, we provide a model that aims to describe the impact of a massive cyber attack on an insurance portfolio, taking into account the structure of the network. Due to the contagion, such an event can rapidly generate consequent damages, and mutualization of the losses may not hold anymore. The composition of the portfolio should therefore be diversified enough to prevent or reduce the impact of such events, with the difficulty that the relationships between actor is difficult to assess. Our approach consists in introducing a multi-group epidemiological model which, apart from its ability to describe the intensity of connections between actors, can be calibrated from a relatively small amount of data, and through fast numerical procedures. We show how this model can be used to generate reasonable scenarios of cyber events, and investigate the response to different types of attacks or behavior of the actors, allowing to quantify the benefit of an efficient prevention policy. |
| Keywords: | Cyber insurance,cyber risk,compartmental models,multi-SIR,network structures |
| Date: | 2021–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03388840&r= |
| By: | David Neumark; Bogdan Savych |
| Abstract: | We examine the effects of must-access prescription drug monitoring programs (PDMPs) and recent regulations limiting the duration of initial opioid prescriptions on care received by patients with work-related injuries, focusing on opioid utilization and medical care related to pain management. We find that must-access PDMPs contributed to declines in opioid utilization, while regulations limiting duration of initial opioid prescriptions had little effect on whether workers receive opioids, but reduced opioid use among those with prescriptions. We find limited evidence that must-access PDMPs affected utilization of other medical care related to pain management, and that must-access PDMPs and limits on initial prescriptions had little impact on the duration of temporary disability benefits captured at 12 months of maturity. |
| JEL: | I13 J28 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29371&r= |
| By: | Tom Chang; Mireille Jacobson; Manisha Shah; Rajiv Pramanik; Samir B. Shah |
| Abstract: | Can financial incentives, public health messages and other behavioral nudges –approaches deployed by state and local governments, employers, and health systems – increase SARS-CoV-2 vaccination rates among the vaccine hesitant in the US? In mid-2021, we randomly assigned unvaccinated members of a Medicaid managed care health plan to $10 or $50 financial incentives, different public health messages, a simple appointment scheduler, or control to assess impacts on SARS-CoV-2 vaccination intentions and vaccine uptake within 30 days of intervention. While messages increased vaccination intentions, none of the treatments increased overall vaccination rates. Consistent with backlash concerns, financial incentives and negative messages decreased vaccination rates for some subgroups. Financial incentives and other behavioral nudges do not meaningfully increase SARS-CoV-2 vaccination rates amongst the vaccine hesitant. |
| JEL: | I12 I18 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29403&r= |
| By: | David Autor; David Dorn; Gordon H. Hanson |
| Abstract: | Abstract We evaluate the duration of the China trade shock and its impact on a wide range of outcomes over the period 2000 to 2019. The shock plateaued in 2010, enabling analysis of its effects for nearly a decade past its culmination. Adverse impacts of import competition on manufacturing employment, overall employment-population ratios, and income per capita in more trade-exposed U.S. commuting zones are present out to 2019. Over the full study period, greater import competition implies a reduction in the manufacturing employment-population ratio of 1.54 percentage points, which is 55% of the observed change in the value, and the absorption of 86% of this net job loss via a corresponding decrease in the overall employment rate. Reductions in population headcounts, which indicate net out-migration, register only for foreign-born workers and the native-born 25-39 years old, implying that exit from work is a primary means of adjustment to trade-induced contractions in labor demand. More negatively affected regions see modest increases in the uptake of government transfers, but these transfers primarily take the form of Social Security and Medicare benefits. Adverse outcomes are more acute in regions that initially had fewer college-educated workers and were more industrially specialized. Impacts are qualitatively—but not quantitatively—similar to those caused by the decline of employment in coal production since the 1980s, indicating that the China trade shock holds lessons for other episodes of localized job loss. Import competition from China induced changes in income per capita across local labor markets that are much larger than the spatial heterogeneity of income effects predicted by standard quantitative trade models. Even using higher-end estimates of the consumer benefits of rising trade with China, a substantial fraction of commuting zones appears to have suffered absolute declines in average real incomes. |
| JEL: | E24 F16 J23 J31 R12 R23 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29401&r= |