Spenkch, Jörg L. (2011): Moral hazard and selection among the poor: evidence from a randomized experiment.
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Not only does economic theory predict high-risk individuals to be more likely to purchase insurance, but insurance coverage is also thought to crowd out precautionary activities. In spite of stark theoretical predictions, there is conflicting empirical evidence on adverse selection, and evidence on ex ante moral hazard is very scarce. Using data from the Seguro Popular Experiment in Mexico, this paper documents patterns of selection on observables into health insurance as well as the existence of non-negligible ex ante moral hazard. More specifically, the findings indicate that (i) agents in poor self-assessed health prior to the intervention have, all else equal, a higher propensity to take up insurance; and (ii) insurance coverage reduces the demand for self-protection in the form of preventive care. Curiously, however, individuals do not sort based on objective measures of their health.
|Item Type:||MPRA Paper|
|Original Title:||Moral hazard and selection among the poor: evidence from a randomized experiment|
|Keywords:||health insurance, adverse selection, moral hazard, Seguro Popular|
|Subjects:||I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design
I - Health, Education, and Welfare > I1 - Health > I10 - General
|Depositing User:||Jörg L. Spenkuch|
|Date Deposited:||16. Dec 2011 00:23|
|Last Modified:||20. Feb 2013 21:20|
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Adverse selection and moral hazard among the poor: evidence from a randomized experiment. (deposited 12. Jun 2011 00:43)
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