In:
American Economic Journal: Applied Economics, American Economic Association, Vol. 15, No. 3 ( 2023-07-01), p. 313-340
Abstract:
We present robust evidence on adverse selection in hospitalization insurance for low-income individuals that received first-time access to insurance. A large randomized control trial from Pakistan allows us to separate adverse selection from moral hazard, estimate how selection changes at different points of the demand curve, and test simple measures to limit adverse selection. The results reveal substantial selection in individual policies, leading to welfare losses and the threat of a market breakdown. Bundling insurance policies at the household level or higher almost eliminates adverse selection, thus mitigating its welfare consequences and facilitating sustainable insurance supply. (JEL D82, G22, I13, I18, O15, O16)
Type of Medium:
Online Resource
ISSN:
1945-7782
,
1945-7790
DOI:
10.1257/app.20200639
Language:
English
Publisher:
American Economic Association
Publication Date:
2023
detail.hit.zdb_id:
2442384-1
detail.hit.zdb_id:
2452635-6
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