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Overconfidence and Health Insurance Participation among the Elderly

Author

Listed:
  • Huang, Wei

    (National University of Singapore)

  • Luo, Mi

    (New York University)

Abstract

People may have imperfect information about their health status and thus make suboptimal decisions in insurance participation. Using national representative samples of the elderly in US and China, we find that people with lower socio-economic status and poorer health are relatively less likely to realize how unhealthy they are and this overconfidence is associated with no insurance participation. Accurate health information provided through physical examinations induces relatively higher participation among the overconfident people afterwards. These findings contribute a new explanation for the insufficient participation and advantageous selection in health insurance, and provide new insights on the insurance market and policy suggestions.

Suggested Citation

  • Huang, Wei & Luo, Mi, 2015. "Overconfidence and Health Insurance Participation among the Elderly," IZA Discussion Papers 9481, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9481
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    File URL: https://docs.iza.org/dp9481.pdf
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    References listed on IDEAS

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    1. Wei Huang & Xiaoyan Lei & Geert Ridder & John Strauss & Yaohui Zhao, 2013. "Health, Height, Height Shrinkage, and SES at Older Ages: Evidence from China," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 86-121, April.
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    Cited by:

    1. Sai Krishnan S. & Subramanian S. Iyer & Sai Balaji SMR, 2022. "Insights from behavioral economics for policymakers of choice‐based health insurance markets: A scoping review," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(2), pages 115-143, June.
    2. Feng, Jin & Song, Hong & Wang, Zhen, 2020. "The elderly's response to a patient cost-sharing policy in health insurance: Evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 189-207.
    3. Klajdi Bregu, 2022. "The effect of overconfidence on insurance demand," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(2), pages 298-326, September.

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    More about this item

    Keywords

    overconfidence; health; health insurance participation;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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