Peter Zweifel

We propose a dynamic economic model of medical spending, consumption, and risky investment including reference values in health and their adaptation to decaying health, which are found empirically relevant to the demand for medical care. Calibrating the model using Health and Retirement Study data yields gradually adapting health reference values for both genders which closely replicate observed medical spending and shares of risky investment. Including projection bias, meaning inability to fully anticipate the health reference value adaptation, significantly improves our model’s replication of observed choices for less wealthy individuals.

In der Vergangenheit hat die Bedeutung der Sozialversicherung (SV) im Vergleich zur Privatversicherung (PV) stark zugenommen. Vor diesem Hintergrund versucht dieser Beitrag vier Fragen abzuklären: (1) Wie stichhaltig ist das unter Ökonomen beliebte Argument, wonach die PV unter einem Marktversagen leidet, das die SV heilt oder zumindest mildert? (2) Welche Spielart des Marktversagens ist von größerer Relevanz, das moralische Risiko oder die adverse Selektion? (3) Kann der politökonomische Ansatz nicht nur die Existenz, sondern auch die Expansion der SV erklären? (4) Gibt es Versicherungszweige, bei denen sich die Arbeitsteilung zwischen PV und SV verbessern ließe? Die meisten Forschungsergebnisse stammen aus den USA, doch die (wenigen) aus den DACH-Ländern (Deutschland, Österreich, Schweiz) werden ebenfalls berücksichtigt.

I. Sick leave is a central feature of labour market institutions in developed economies, allowing workers to temporarily withdraw from work due to illness without loss of income. While designed to ...

The objective of this paper is to measure preferences for income redistribution through the public budget when recipients differ in terms of their 'degree of merit' (such as the working poor) and their nationalities. A discrete choice experiment (DCE) was performed involving a representative sample of 979 Swiss citizens, permitting to test a number of competing hypotheses about the demand for redistribution. The income tax to be paid as a share of income serves as the price attribute to derive marginal willingness-to-pay (MWTP) values. They are found to differ significantly between recipients' nationalities even before the acceleration of immigration after 2009 (Swiss, citizens of Western European countries, citizens of other countries) and their types (old-age pensioners, people in ill health, the unemployed, working poor, and families with children). Swiss citizens exhibit positive MWTP in favor of themselves or Western European citizens to the detriment of citizens of other countries, who are perceived to be culturally distant. JEL classification: C35, C93, C99, D12, D63, D64, H23, H53

The objective of this paper is to pursue an intuitive idea: for a consumer who represents an “unfavorable” health risk but an “excellent risk” as a driver, a multi-peril policy could be associated with a reduced selection effort on the part of the insurer. If this intuition should be confirmed, it will serve to address the decade-long concern with risk selection both in the economic literature and on the part of policy makers. As an illustrative example, a two-peril model is developed in which consumers deploy effort in search of a policy offering them maximum coverage at the current market price while insurers deploy effort designed to stave off unfavorable risks. Two types of Nash equilibria are compared: one in which the insurer is confronted with high-risk and low-risk types, and another one where both types are a “better risk” with regard to a second peril. The difference in the insurer’s selection effort directed at high-risk and low-risk types is indeed shown to be lower in the latter case, resulting in a mitigation of adverse selection.

The objective of this paper is to assess the behavior of policyholders and insurance companies in the presence of adverse selection by accounting for costly search and selection efforts, respectively. Insurers seek to stave off high-risk types, while consumers are hypothesized to maximize coverage at a given premium. Reaction functions are derived for the two players giving rise to Nash equilibria in efforts space, which are separating almost certainly regardless of the share of low risks in the market. Empirical evidence from the Australian market for automobile insurance is analyzed using Structural Equation Modeling. Convergence has been achieved with both the developmental and test samples. Both consumer search and insurer selection are found to be positively correlated with risk type, providing a good measure of empirical support for the theoretical model.

The consistently missing demand for catastrophe insurance and for coverage of other low-probability–high-consequence risks is often referred to as the catastrophe insurance puzzle. People show reluctance to insure low-probability–high-consequence events, even with some disastrous consequences, yet insure against small high-probability–low-consequence events. There has been no convincing explanation of this puzzle to this date. This article points out that the underlying rationale may be that individuals interpret insurance contracts with low payout probability as an investment with negative expected net present value. While premium payments start with the conclusion of the contract, usually there is only one loss payment in the near or far future. Using a simple annuity model with fixed annual premiums and expected indemnity payouts, it is found that even an individual characterized by the degree of risk aversion found in the literature is unlikely to purchase insurance with these characteristics. To alleviate this unfavorable insurance purchase syndrome, combining a low-probability with a high-probability loss insurance contract may be a way to incentivize individuals to purchase catastrophe risk coverage.