Insuring Replaceable Possessions
Bibliographic Data
| ID | 9722155 |
|---|---|
| Authors | David de Meza (0000-0002-5638-8310, London School of Economics London United Kingdom, corresponding author), Diane Reyniers (0000-0003-0677-2020, London School of Economics London United Kingdom) |
| Year | 2023 |
| Volume | 90 |
| Issue | 357 |
| Pages | 271-284 |
| Publication date | 2023-01-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ecca.12454 |
| OpenAlex | W4309758627 |
| Language | EN |
| References cited | 21 |
Equivalencebetween insuring income and what is bought with income is commonly assumed. It seems to be implicitly held that uninsured but replaceable goods will always be replaced if they fail. This does not follow. People may have difficulty coming up with the money to pay for a replacement out of pocket. Also, the income effect of a loss may mean that replacement is not worthwhile. We show that as a result, equivalence breaks down. Both theory and evidence are provided. Implications include a tendency of empirical papers to overestimate risk aversion, a reason why demand for insurance increases with income, and the mistaken attribution of preference inconsistency
Attribution · Economics · Equivalence (formal languages) · Microeconomics · Preference · Decision-Making and Behavioral Economics · Financial Literacy, Pension, Retirement Analysis · Housing Market and Economics · Psychology · Social Psychology
| Citation velocity | historical |
|---|---|
| Highly cited | No |