Selection in Insurance Markets
Theory and Empirics in Pictures
Bibliographic Data
| ID | 4841836 |
|---|---|
| Authors | Liran Einav (0000-0003-3349-5356, Associate Professor of Economics, Stanford University, Stanford, California and Research Associates, National Bureau of Economic Research, Cambridge, Massachusetts.), Amy Finkelstein (0000-0002-9941-6684, Professor of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts and Research Associates, National Bureau of Economic Research, Cambridge, Massachusetts.) |
| Year | 2011 |
| Volume | 25 |
| Issue | 1 |
| Pages | 115-138 |
| Publication date | 2011-02-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Journal of Economic Perspectives (JOURNAL) |
| Journal identifiers | ISSN: 0895-3309 • E-ISSN: 1944-7965 |
| Publisher | American Economic Association (PUBLISHER • US) |
| DOI | 10.1257/jep.25.1.115 |
| PMID | 21595322 |
| OpenAlex | W2102738074 |
| Language | EN |
| Citations received | 19 |
| References cited | 17 |
Government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention, based on classic work from the 1970s, has been the problem of adverse selection. Over the last decade, empirical work on selection in insurance markets has gained considerable momentum. This research finds that adverse selection exists in some insurance markets but not in others. And it has uncovered examples of markets that exhibit "advantageous selection"-a phenomenon not considered by the original theory, and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection. Advantageous selection arises when the individuals who are willing to pay the most for insurance are those who are the most risk averse (and so have the lowest expected cost). Indeed, it is natural to think that in many instances individuals who value insurance more may also take action to lower their expected costs: drive more carefully, invest in preventive health care, and so on. Researchers have taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions. In this essay, we present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets. This graphical approach provides both a useful and intuitive depiction of the basic theory of selection and its implications for welfare and public policy, as well as a lens through which one can understand the ideas and limitations of existing empirical work on this topic
Actuarial science · Adverse selection · Auto insurance risk selection · Economic interventionism · Economics · Empirical research · General insurance · Group insurance · Income protection insurance · Insurance policy · Key person insurance · Microeconomics · Political science · Public economics · Welfare · Computer Science · Global Health Care Issues · Health Systems, Economic Evaluations, Quality of Life · Healthcare Policy and Management
False Diagnoses
Health Insurance
Can risk-rating of incremental premiums improve consumer sorting across coverage options in mandatory health insurance markets
Adverse selection and health insurance decisions of young migrant workers
Pre-welfare state provision and adverse selection
Insurance demand in emerging Asian and OECD countries
Extreme under and overcompensation in morbidity-based health plan payments
Third-Party Moral Hazard and the Problem of Insurance Externalities
Estimating Self‐Selection in Medicare Advantage
Imperfect Competition in Selection Markets
The Two-Margin Problem in Insurance Markets
Price Discrimination in Selection Markets
The Questionable Value of Having a Choice of Levels of Health Insurance Coverage
Health Insurance without Single Crossing
Risk Adjustment in Health Insurance Markets
Estimating the causal effects of private health insurance in Brazil
Selection in Health Insurance Markets and Its Policy Remedies
Delivering Public Health Insurance Through Private Plan Choice in the United States
Between voluntarism and compulsion
| Unique citing works | 19 |
|---|---|
| Citations per year | 1,73 |
| Citation span | 2015 - 2026 (12) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 18 |