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on Insurance Economics |
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Issue of 2019‒08‒26
23 papers chosen by Soumitra K. Mallick Indian Institute of Social Welfare and Business Management |
| By: | Korfhage, Thorben |
| Abstract: | In this paper, I estimate a dynamic structural model of labor supply, retirement, and informal care supply, incorporating labor market frictions and the German tax and benefit system. I find that informal elderly care has adverse and persistent effects on labor market outcomes and therefore negatively affects lifetime earnings, future pension benefits, and individuals' well-being. These consequences of caregiving are heterogeneous and depend on age, previous earnings, and institutional regulations. Policy simulations suggest that, even though fiscally costly, public long-term care insurance can offset the personal costs of caregiving to a large extent - in particular for low-income individuals. |
| Keywords: | long-term care,informal care,long-term care insurance,labor supply,retirement,pension benefits,structural model |
| JEL: | I18 I38 J14 J22 J26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:813&r=all |
| By: | Charles J. Courtemanche; Ishtiaque Fazlul; James Marton; Benjamin D. Ukert; Aaron Yelowitz; Daniela Zapata |
| Abstract: | The purpose of this paper is to estimate the impact of the major components of the ACA (Medicaid expansion, subsidized Marketplace plans, and insurance market reforms) on disparities in insurance coverage after four years. We use data from the 2011–2017 waves of the American Community Survey (ACS), with the sample restricted to nonelderly adults. Our methods feature a difference-in-difference-in-differences model, developed in the recent ACA literature, which separately identifies the effects of the nationwide and Medicaid expansion portions of the law. The differences in this model come from time, state Medicaid expansion status, and local area pre-ACA uninsured rate. We stratify our sample separately by income, race/ethnicity, marital status, age, gender, and geography in order to examine access disparities. After four years, we find that the fully implemented ACA eliminated 44 percent of the coverage gap across income groups, with the Medicaid expansion accounting for this entire reduction. The ACA also reduced coverage disparities across racial groups by 26.7 percent, across marital status by 45 percent, and across age groups by 44 percent, with these changes being partly attributable to both the Medicaid expansion and nationwide components of the law. |
| JEL: | H51 I13 I14 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26157&r=all |
| By: | Kandilov, Amy; Kandilov, Ivan T. |
| Keywords: | Labor and Human Capital |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290992&r=all |
| By: | Faical Akaichi; Joan Costa-Font; Richard Frank |
| Abstract: | We examine evidence from two unique discrete choice experiments (DCE) on long term care insurance and several of its relevant attributes, and more specifically, choices made by 15,298 individuals in the United States with and without insurance. We study the valuation of the following insurance attributes, namely daily insurance benefit, insurance coverage, the compulsory and voluntary nature of the insurance policy design, alongside the costs (insurance premium) and health requirements. This paper investigates respondents’ preferences and willingness to pay (WTP) for these care insurance’s attributes using a random parameter logit model, and assess the heterogeneity of choice responses using demographic, socioeconomic and attitudinal motivations to segment response to insurance choices. We find that an increase in the insurance premium by an additional $100 would reduce insurance uptake by 1pp. Insurance policy uptake is higher when it provides benefits for the lifetime (the monthly marginal WTP being $178.64), and voluntary (the monthly marginal WTP increases by an extra $74.71) as opposed to universal, and when it forgoes health checks (the monthly marginal WTP increases by an extra 28US$). |
| JEL: | I13 I18 I31 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26118&r=all |
| By: | Marika Cabral; Can Cui; Michael Dworsky |
| Abstract: | There is ongoing policy debate about whether government insurance coverage mandates are necessary to effectively address market failures in private insurance markets. This paper analyzes the demand for insurance in the absence of a coverage mandate and the potential market failure rationale for coverage mandates in the context of workers' compensation insurance. Workers' compensation is a state-regulated insurance program that provides employees with income and medical benefits in the event of work-related injuries or illnesses. Nearly all states have mandated workers' compensation insurance coverage; the sole exception is Texas. Using administrative data from the unique voluntary Texas workers' compensation insurance system, we estimate the demand for workers' compensation insurance leveraging idiosyncratic regulatory updates to relative premiums across industry-occupation classifications. The difference-in-differences estimates indicate that the demand for workers' compensation coverage is price-sensitive, with a 10% increase in premiums leading to approximately a 3% decline in coverage. Drawing upon these estimates and additional data on claim costs, we analyze the potential rationale for government intervention to increase coverage through subsidies or a mandate. This analysis suggests that classic market failure justifications for government intervention in insurance markets—such as adverse selection, market power, and externalities—may not be compelling justifications for a mandate in this setting. |
| JEL: | H0 I1 I13 I18 J38 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26103&r=all |
| By: | Charles J. Courtemanche; James Marton; Aaron Yelowitz |
| Abstract: | This paper examines trends in Medicaid enrollment across the income distribution after the ACA’s Medicaid expansion. Using data from the American Community Survey between 2012 and 2017, we compare Medicaid coverage over time in 9 states that expanded Medicaid in 2014 with no previous expansion for able-bodied, working-age adults with 12 states that had not expanded Medicaid by 2019 and also had no previous expansion for such adults. A difference-in-differences model is used to formalize this comparison. Similar to many previous studies, we find that Medicaid coverage increased dramatically for income-eligible adults under 138% of the federal poverty level (FPL). In addition, we show that Medicaid participation increased by 3.0 percentage points for those with incomes above 138% of the FPL from a pre-ACA baseline of 2.7% among this group. While we cannot say with certainty why these individuals were able to participate in Medicaid, we offer several potential explanations that should be the subject of future work. For example, it is possible that the ACA Medicaid expansions were administered differently at the state or local level than federal rules would require, similarly to differences between effective tax rates and statutory tax rates in many transfer programs. |
| JEL: | H51 I13 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26145&r=all |
| By: | Frank Bosserhoff; Mitja Stadje |
| Abstract: | We consider a time-consistent mean-variance portfolio selection problem of an insurer and allow for the incorporation of basis (mortality) risk. The optimal solution is identified with a Nash subgame perfect equilibrium. We characterize an optimal strategy as solution of a system of partial integro-differential equations (PIDEs), a so called extended Hamilton-Jacobi-Bellman (HJB) system. We prove that the equilibrium is necessarily a solution of the extended HJB system. Under certain conditions we obtain an explicit solution to the extended HJB system and provide the optimal trading strategies in closed-form. A simulation shows that the previously found strategies yield payoffs whose expectations and variances are robust regarding the distribution of jump sizes of the stock. The same phenomenon is observed when the variance is correctly estimated, but erroneously ascribed to the diffusion components solely. Further, we show that differences in the insurance horizon and the time to maturity of a longevity asset do not add to the variance of the terminal wealth. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.05534&r=all |
| By: | Anna Denkowska; Stanis{\l}aw Wanat |
| Abstract: | This paper is part of the research on the interlinkages between insurers and their contribution to systemic risk on the insurance market. Its main purpose is to present the results of the analysis of linkage dynamics and systemic risk in the European insurance sector which are obtained using correlation networks. These networks are based on dynamic dependence structures modelled using a copula. Then, we determine minimum spanning trees (MST). Finally, the linkage dynamics is described by means of selected topological network measures. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.01142&r=all |
| By: | Cynthia Kinnan |
| Abstract: | Informal insurance is an important risk-coping mechanism in developing countries, yet this risk sharing is incomplete. Models of limited commitment, moral hazard, and hidden income have been proposed to explain incomplete informal insurance. This paper shows that the way in which history matters in forecasting consumption can be used to distinguish hidden income from limited commitment and moral hazard. The paper also develops a non-parametric test, based on over-identifying restrictions, that can test across models in the presence of nonclassical measurement error and individual-level heterogeneity. In panel data from rural Thailand, limited commitment and moral hazard are rejected. The predictions of the hidden income model are supported by the data. |
| JEL: | D82 D91 O12 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0831&r=all |
| By: | Petr Jakubik; Sibel Uguz (EIOPA) |
| Abstract: | This article empirically investigates whether the introduction of green bond policies by insurance companies have a positive impact on their equity prices. To this aim, the sample of listed (re)insurers in Europe using monthly data for years 2012 – 2019 is employed. Announcements, press releases and semi-annual or annual reports are used to determine when the insurance companies committed to a green investment, issuance of green bonds or launching a green fund. Our results suggest that market investors positively price introducing such a policies for the issuance of green bonds or launching a green fund. However, the same results were not confirmed for initial investments in green bonds. |
| Keywords: | insurance, green bonds, equity prices |
| JEL: | G11 G12 G22 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:eio:thafsr:14&r=all |
| By: | Schultz, Alexander J.; Ifft, Jennifer E.; Kuethe, Todd H. |
| Keywords: | Agricultural Finance |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290743&r=all |
| By: | Marianne Bitler; Christopher Carpenter |
| Abstract: | Much research has studied the health effects of expanding insurance coverage to low-income people, but there is less work on the direct provision of care to the uninsured. We study the two largest federal programs aimed at reducing breast and cervical cancer among uninsured women in the US: one that paid for cancer screenings with federal funds and one that paid for cancer treatments under state Medicaid programs. Using variation in rollout of each program across states from 1991-2005, we find that funding for cancer treatment did not significantly increase most types of cancer screenings for uninsured women. In contrast, funding for cancer detection significantly increased breast and cervical cancer screenings among 40-64 year old uninsured women, with much smaller effects for insured women (who were not directly eligible). Moreover, we find that these program-induced screenings significantly increased detection of early stage pre-cancers and cancers of the breast but had no significant effect on early stage or other cancers of the cervix. Our results suggest that direct provision can significantly increase healthcare utilization among vulnerable populations. |
| JEL: | I1 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26140&r=all |
| By: | Claire Richert (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - AgroParisTech - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Katrin Erdlenbruch (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - AgroParisTech - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Frédéric Grelot (UMR G-EAU - Gestion de l'Eau, Acteurs, Usages - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - AgroParisTech - IRSTEA - Institut national de recherche en sciences et technologies pour l'environnement et l'agriculture - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | Floods can be managed at the collective and individual level. Knowing the interaction between measures taken at both scales can help design more efficient flood risk management policies. Here, we combine the data collected during a survey of 331 inhabitants of flood-prone areas in the South of France and spatial databases to empirically examine the interaction between individual adaptation measures and three types of collective management tools: a national insurance scheme, dikes, and zoning instruments. In line with the levee effect hypothesis, we found that dike protection reduces the probability to have or take individual adaptation measures and that this effect could be mitigated by zoning instruments. Moreover, we found that the national insurance scheme does not crowd out individual adaptation. |
| Keywords: | levee effect,zoning mechanism,insurance,Flood policies,Levee eect,Individual adaptation decisions,Zoning,Insurance JEL Classication: Q54,Q58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-02189117&r=all |
| By: | Valery Baskakov; Nikolay Sheparnev; Evgeny Yanenko |
| Abstract: | The paper proposes an original methodology for constructing quantitative statistical models based on multidimensional distribution functions constructed on the basis of the insurance companies' data on inshurance policies (including policies with deductible) and claims incurred. Real data of some Russian insurance companies on non-life insurance contracts illustrate some opportunities of the proposed approach. The point and interval estimates of net premium, claims frequency, claims reserves including IBNR and OCR, are thus obtained. The resulting estimate of claims reserves falls in the range of reasonable estimates calculated on the basis of traditional reserving methods (the chain-ladder method, the frequency-severity method and the Bornhuetter-Ferguson method). The proposed methodology is based on additive estimates of a company's financial indicators, in the sense that they are calculated as a sum of estimates built separately for each element of the sample (claim). This allows using the proposed methodology to model insurance companies' financial flows and, in particular, to solve the problems of reserve redistribution between particular segments of insurance portfolio and/or time intervals; to adjust risk as part of financial reporting under IAS 17 Insurance Contracts; and to deal with many other tasks. The accuracy of insurance companies' financial parameters estimate based on the proposed methods was tested by statistical modeling. IBNR was used as the test parameter. The modeling results showed a satisfactory accuracy of the proposed reserve estimates. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.05200&r=all |
| By: | Aglasan, Serkan; Goodwin, Barry K. |
| Keywords: | Agribusiness |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:290698&r=all |
| By: | Lu, Pin; Wu, Kaidi |
| Keywords: | Risk and Uncertainty |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291271&r=all |
| By: | Chloe Gerves-Pinquie (Irset - Institut de recherche, santé, environnement et travail - UA - Université d'Angers - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - EHESP - École des Hautes Études en Santé Publique [EHESP] - INSERM - Institut National de la Santé et de la Recherche Médicale - Biosit : Biologie - Santé - Innovation Technologique - Structure Fédérative de Recherche en Biologie et Santé de Rennes); Anne Girault (EA MOS - EA Management des Organisations de Santé - PRES Sorbonne Paris Cité - EHESP - École des Hautes Études en Santé Publique [EHESP]); Serena Phillips (GW - George Washington University); Sarah Raskin (VCU - Virginia Commonwealth University); Mandi Pratt-Chapman (GW - George Washington University) |
| Abstract: | Patient navigation has expanded as a promising approach to improve cancer care coordination and patient adherence. This paper addresses the need to identify the evidence on the economic impact of patient navigation in colorectal cancer, following the Health Economic Evaluation Publication Guidelines. Articles indexed in Medline, Cochrane, CINAHL, and Web of Science between January 2000 and March 2017 were analyzed. We conducted a systematic review of the literature using Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines. The quality assessment of the included studies was based on the Consolidated Health Economic Evaluation Reporting Standards (CHEERS) checklist. Inclusion criteria indicated that the paper's subject had to explicitly address patient navigation in colorectal cancer and the study had to be an economic evaluation. The search yielded 243 papers, (of which were finally included within this review. Seven out of the nine studies included met standards for high-quality based on CHEERS criteria. Eight concluded that patient navigation programs were unequivocally cost-effective for the health outcomes of interest. Six studies were cost-effectiveness analyses. All studies computed the direct costs of the program, which were defined a minima as the program costs. Eight of the reviewed studies adopted the healthcare system perspective. Direct medical costs were usually divided into outpatient and inpatient visits, tests, and diagnostics. Effectiveness outcomes were mainly assessed through screening adherence, quality of life and time to diagnostic resolution. Given these outcomes, more economic research is needed for patient navigation during cancer treatment and survivorship as well as for patient navigation for other cancer types so that decision makers better understand costs and benefits for heterogeneous patient navigation programs. |
| Keywords: | Patient navigation,Health care costs,Cost-benefit analysis,Colorectal cancer |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01973691&r=all |
| By: | Hans Fehr; Maurice Hofmann |
| Abstract: | We study the interplay between tenure decisions, stock market investment and the public social security system. Housing equity not only serves a dual purpose as a consumption good and as an asset, but also provides insurance to buffer various risks in retirement. Our life cycle model captures these links in order to explain why homeownership in Germany is so low. Our simulation results indicate that the public long-term care as well as the pension system reduce the homeownership rate in Germany by 10-15 percentage points. |
| Keywords: | homeownership, stock market participation, life-cycle models, long-term care |
| JEL: | C61 G11 H55 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7783&r=all |
| By: | Costas Meghir; Ahmed Mushfiq Mobarak; Corina D. Mommaerts; Melanie Morten |
| Abstract: | Do new migration opportunities for rural households change the nature and extent of informal risk sharing? We experimentally document that randomly offering poor rural households subsidies to migrate leads to a 40% improvement in risk sharing in their villages. We explain this finding using a model of endogenous migration and risk sharing. When migration is risky, the network can facilitate migration by insuring that risk, which in turn crowds-in risk sharing when new migration opportunities arise. We estimate the model and find that welfare gains from migration subsidies are 42% larger, compared with the welfare gains without spillovers, once we account for the changes in risk sharing. Our analysis illustrates that (a) ignoring the spillover effects on the network gives an incomplete picture of the welfare effects of migration, and (b) informal risk sharing may be an essential determinant of the takeup of new income-generating technologies. |
| JEL: | D12 D52 J6 O12 R23 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26082&r=all |
| By: | Attar, Andrea; Mariotti, Thomas; Salanié, François |
| Abstract: | We study resource allocation under private information when the planner cannot prevent bilateral side trading between consumers and firms. Adverse selection and side trading severely restrict feasible trades: each marginal quantity must be fairly priced given the consumer types who purchase it. The resulting social costs are twofold. First, second-best efficiency and robustness to side trading are in general irreconcilable requirements. Second, there actually exists a unique budget-feasible allocation robust to side trading, which deprives the planner from any capacity to redistribute resources between different types of consumers. We discuss the relevance of our results for insurance and financial markets. |
| Keywords: | Adverse Selection; Second-Best Allocations; Side Trading |
| JEL: | D43 D82 D86 |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13872&r=all |
| By: | Crane-Droesch, Andrew; Marshall, Elizabeth; Rosch, Stephanie; Riddle, Anne; Cooper, Joseph; Wallander, Steven |
| Abstract: | Programs that help farmers manage risk are a major component of the Federal Government’s support to rural America. Changes to this risk—and thus to the Government’s fiscal exposure— are expected as weather averages and extremes change over the coming decades. This study uses a combination of statistical and economic modeling techniques to explore the mechanisms by which climate change could affect the cost of the Federal Crop Insurance Program (FCIP) to the Federal Government, which accounts for approximately half of Government expenditures on agricultural risk management. Our approach is to compare scenarios of the future that differ only in terms of climate. Using weather scenarios for 2060-99 from general circulation models, we project decreases in corn and soybean yields and mixed changes to winter wheat yields, compared to a baseline scenario in which climate is identical to that of the past three decades. We use an economic model of the U.S. agricultural sector to estimate how projected yield changes may induce farmers to change what and where they plant, and the resulting impacts on production and output prices. These ingredients allow us to explore drivers of change in the cost of the FCIP’s Revenue Protection program, which is used as a heuristic for potential farm safety net programs that could exist in the future. Differences between the scenarios are driven by increasing prices for the three crops studied, caused by relatively lower production in the presence of inelastic demand, as well as by changing volatility in both yields and prices. |
| Keywords: | Environmental Economics and Policy, Farm Management, Risk and Uncertainty |
| Date: | 2019–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:291962&r=all |
| By: | Yang, Feng-An; Chang, Hung-Hao |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea19:291292&r=all |
| By: | Misha Perepelitsa |
| Abstract: | A family of models of individual discrete choice are constructed by means of statistical averaging of choices made by a subject in a reinforcement learning process, where the subject has short, k-term memory span. The choice probabilities in these models combine in a non-trivial, non-linear way the initial learning bias and the experience gained through learning. The properties of such models are discussed and, in particular, it is shown that probabilities deviate from Luce's Choice Axiom, even if the initial bias adheres to it. Moreover, we shown that the latter property is recovered as the memory span becomes large. Two applications in utility theory are considered. In the first, we use the discrete choice model to generate binary preference relation on simple lotteries. We show that the preferences violate transitivity and independence axioms of expected utility theory. Furthermore, we establish the dependence of the preferences on frames, with risk aversion for gains, and risk seeking for losses. Based on these findings we propose next a parametric model of choice based on the probability maximization principle, as a model for deviations from expected utility principle. To illustrate the approach we apply it to the classical problem of demand for insurance. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1908.06133&r=all |