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Probability Numeracy and Health Insurance Purchase

Author

Listed:
  • Rik Dillingh
  • Peter Kooreman
  • Jan Potters

Abstract

This paper provides new field evidence on the role of probability numeracy in health insurance purchase. Our regression results, based on rich survey panel data, indicate that the expenditure on two out of three measures of health insurance first rises with probability numeracy and then falls again. This non-monotonic relationship suggests that probability numeracy affects health insurance decisions through several channels. In the third case—the obligatory Dutch basic health insurance—we find that high levels of probability numeracy coincide with a lower deductible choice. We discuss possible explanations for the patterns we find, including status quo bias and ambiguity aversion, and the related policy implications. Copyright The Author(s) 2016

Suggested Citation

  • Rik Dillingh & Peter Kooreman & Jan Potters, 2016. "Probability Numeracy and Health Insurance Purchase," De Economist, Springer, vol. 164(1), pages 19-39, March.
    • Handle: RePEc:kap:decono:v:164:y:2016:i:1:p:19-39
    DOI: 10.1007/s10645-015-9258-8
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    Citations

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    Cited by:

    1. Luis Diaz-Serrano & Joop Hartog & William Nilsson & Hans van Ophem & Po Yang, 2016. "Student Earnings Expectations: Heterogeneity or Noise?," CESifo Working Paper Series 6110, CESifo.
    2. Mol, Jantsje M. & Botzen, W.J. Wouter & Blasch, Julia E., 2020. "Behavioral motivations for self-insurance under different disaster risk insurance schemes," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 967-991.
    3. Jantsje M. Mol & W. J. Wouter Botzen & Julia E. Blasch & Hans de Moel, 2020. "Insights into Flood Risk Misperceptions of Homeowners in the Dutch River Delta," Risk Analysis, John Wiley & Sons, vol. 40(7), pages 1450-1468, July.
    4. Evita Allodi & Enrico M. Bocchino & Gian P. Stella, 2023. "Understanding Insurance Knowledge: A Brief 7-Item Measure," International Journal of Business and Management, Canadian Center of Science and Education, vol. 16(2), pages 1-65, February.

    More about this item

    Keywords

    Numeracy; Health insurance; Risk attitudes; Deductible; Ambiguity aversion; C23; D03; D14;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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