TY - JOUR
T1 - Sources of advantageous selection
T2 - Evidence from the medigap insurance market
AU - Fang, Hanming
AU - Keane, Michael P.
AU - Silverman, Dan
PY - 2008/4
Y1 - 2008/4
N2 - We provide evidence of advantageous selection in the Medigap insurance market and analyze its sources. Conditional on controls for Medigap prices, those with Medigap spend, on average, $4,000 less on medical care than those without. But if we condition on health, those with Medigap spend $2,000 more. The sources of this advantageous selection include income, education, longevity expectations, and financial planning horizons, as well as cognitive ability. Conditional on all these factors, those with higher expected medical expenditures are more likely to purchase Medigap. Risk preferences do not appear as a source of advantageous selection; cognitive ability is particularly important.
AB - We provide evidence of advantageous selection in the Medigap insurance market and analyze its sources. Conditional on controls for Medigap prices, those with Medigap spend, on average, $4,000 less on medical care than those without. But if we condition on health, those with Medigap spend $2,000 more. The sources of this advantageous selection include income, education, longevity expectations, and financial planning horizons, as well as cognitive ability. Conditional on all these factors, those with higher expected medical expenditures are more likely to purchase Medigap. Risk preferences do not appear as a source of advantageous selection; cognitive ability is particularly important.
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U2 - 10.1086/587623
DO - 10.1086/587623
M3 - Article
AN - SCOPUS:44149083095
SN - 0022-3808
VL - 116
SP - 303
EP - 350
JO - Journal of Political Economy
JF - Journal of Political Economy
IS - 2
ER -