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on Insurance Economics |
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Issue of 2022‒07‒11
seven papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Kanninen, Ohto; Böckerman, Petri; Suoniemi, Ilpo |
| Abstract: | We propose a method of studying the value of insurance. For this purpose, we analyze well-being of the same individuals, comparing sick and healthy years in German panel survey data on life satisfaction. To impose structure on the income–wellbeing gradient, we fit a flexible utility function to the data, focusing on the differences in marginal utility in the sick and the healthy state, by allowing for a “fixed cost of sickness”. We find that marginal utility of income is higher in the sick state. We use our estimates to gauge the value of sickness insurance for Baily-Chetty type optimal policy calculations. We also show that the income–wellbeing gradient has steepened over time in Germany and we use the fitted model to characterize this change. |
| Keywords: | life satisfaction state dependence risk aversion social insurance optimal benefits sickness absence |
| JEL: | C13 H55 I13 |
| Date: | 2022–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:113269&r= |
| By: | Daniel J. Cooley; Steven M. Smith |
| Abstract: | Irrigation in the Eastern US receives little attention compared to the West, but farmers in humid states of the US, traditionally reliant on rainfall, have more than tripled irrigation since 1978. We examine this trend in Illinois where there has been a nearly threefold increase in center pivot irrigation systems (CPIS) installations since 1988. Specifically, we analyze where and when CPIS installations occur and their benefits in terms of annual crop yield, irrigated acreage, crop selection, and reduction in drought-related insurance payouts. To do so, we create a novel data set derived from a deep learning model capable of automatically identifying the location of CPIS during drought years along with annual county level crop, weather, and insurance data. The results indicate CPIS installations in Illinois are significantly more common over alluvial aquifers after droughts. Additionally, counties with a higher presence of CPIS do not have higher average crop yields, a shift to more water intensive crops, or an expansion of cropland. However, in drought years CPIS presence does have a significant positive effect on corn yield and a significant negative effect on indemnity payments for both soybeans and corn. The results provide insights into an emerging trend of irrigation in humid regions, raising potential policy considerations for crop insurance and signaling a potential need to address water rights as demand increases. |
| JEL: | Q15 Q18 Q25 Q54 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30093&r= |
| By: | International Monetary Fund |
| Abstract: | The Bangko Sentral Ng Pilipinas (BSP), together with the other financial sector regulators and the Department of Finance (DoF), made significant progress in developing a framework for macroprudential supervision. The BSP plays a central role as the bank and payment system supervisor, as well as macroprudential authority with with its financial stability mandate obtained in 2019, and the chair of inter-agency coordination mechanisms (Financial Stability Coordination Council, FSCC). The FSCC was established in 2011 as a voluntary interagency body (without decision-making powers) to coordinate macroprudential policies and crisis management and include the BSP, Securities Exchange Commission (SEC), Insurance Commission (IC), Philippine Deposit Insurance Commission (PDIC) and the DoF. Within the BSP, a financial stability “unit” (OSRM, established in 2017) works on macroprudential analysis and policy preparation. BSP’s Financial Stability Policy Committee (FSPC), a Monetary Board (MB) subcommittee established in 2020, decides on macroprudential issues, while policy decision making on monetary policy and financial sector supervision takes place in the MB. |
| Date: | 2022–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2022/156&r= |
| By: | International Monetary Fund |
| Abstract: | There has been little change in the institutional framework for macroprudential policy oversight since the last FSAP. Macroprudential policy for the banking sector is a shared competency of the Financial Superintendency of Colombia (SFC), the Banco de la República (BR), and the Ministry of Finance (MHCP), although the SFC and the MHCP play dominant roles. The Financial Sector Coordination and Monitoring Committee (CCSSF), which consists of the three institutions and the Financial Institutions Guarantee Fund (Fogafin), is the main platform for information sharing and cooperation, but it does not have a macroprudential mandate or any formal powers. The SFC supervises asset managers and insurance companies, but there is no formal macroprudential oversight framework for those types of financial institutions. |
| Date: | 2022–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:2022/157&r= |
| By: | Jean-Pierre Aubry; Alicia H. Munnell; Laura D. Quinby; Glenn Springstead |
| Abstract: | Social Security is designed to serve as the base of retirement support, to be supplemented by employersponsored plans. However, some state and local government employees – approximately one-quarter, or 5 million workers annually – are not covered by Social Security on their current job. Federal law allows these noncovered workers to remain outside of Social Security if their state or local plan provides comparable benefits. This brief addresses the extent to which lifetime benefits received by noncovered workers are equal to what they would have received from Social Security alone, had they been covered. Hence, the brief compares the pensions of noncovered workers to a very low bar, leaving to later discussion the broader question of how their total retirement income compares to workers with a lifetime of Social Security and employer-provided benefits. This brief follows up on a CRR study that found that while all state and local plans currently satisfy the letter of the law, 43 percent do not provide Social Security-equivalent resources for some hypothetical new hires. Specifically, these plans shortchange workers who spend 6 to 20 years in noncovered employment before finishing their careers in a covered job. The first question addressed here is: how often do noncovered workers leave with 6 to 20 years of tenure? The second question is: do most of these medium-tenure workers start, or end, their careers in government? The discussion proceeds as follows. The first section sets the stage for the analysis by explaining why lifetime benefits for noncovered workers who stay 6-20 years fall short. The second section introduces the data and methodology used to analyze state and local tenure patterns. The third section presents the results, showing that around one-third of state and local workers – regardless of Social Security coverage or occupation – leave the government with 6 to 20 years of tenure. And around half of these medium-tenure workers finish their careers in a private (or federal) job. The final section concludes that a situation where hundreds of thousands of noncovered workers, in any given year, may not receive the basic level of Social Security protection from their pension raises concerns about their overall retirement security. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:slpbrf:slp82&r= |
| By: | Hirokuni Iiboshi; Daisuke Ozaki |
| Abstract: | We quantitatively explore the impact of social security reforms in Japan, facing rapid aging and the highest government debt among developed countries, using an overlapping generations model with four types of agents distinguished by gender and employment type. We find that social security reforms without extending the retirement age raise the welfare of future generations, while the reforms with raising copayment rates for medical and long-term care expenditures, in particular, significantly lower the welfare of low-income groups (females and part-timers) of the current retired and working generations. In contrast, the reform reducing the pension replacement rate lead to a greater decline in the welfare of full-timers. The combination of these reforms and the extension of the retirement age is expected to improve the welfare of the current working generations by 2--9\% over the level without reforms. |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2205.08042&r= |
| By: | Jean-Pierre Aubry; Siyan Liu; Alicia H. Munnell; Laura D. Quinby; Glenn Springstead |
| Abstract: | Social Security is designed to serve as the base of retirement support, to be supplemented by employer-sponsored plans. However, approximately one-quarter of state and local government employees – currently, around 5 million workers annually – are not covered by Social Security on their current job. Federal law allows these noncovered workers to remain outside of Social Security if their state or local plan provides comparable benefits. Since many public pensions have grown less generous in recent years, determining whether state and local plans currently provide comparable benefits is important. |
| Date: | 2022–04 |
| URL: | http://d.repec.org/n?u=RePEc:crr:crrwps:wp2022-04&r= |