Do myopia and asymmetric information matter in the demand for social insurance?

Walid Merouani, Nacer-Eddine Hammouda and Claire El Moudden

No 1212, Working Papers from Economic Research Forum

Abstract: This article challenges the topic of low demand for social insurance by exploring an original survey in the Algerian labor market. Related literature has focused on the efficiency of social insurance systems and discussed their ability to cover everyone. On the other hand, empirical studies highlighted the role of socio-demographic factors in understanding the low social insurance coverage. But the use of behavioral economics tools is still scarce in this field. This article highlights the impact of time discounting and knowledge of social policy on the demand for social insurance. To make the result more robust, we use the discrete choice model. The outcome clearly shows that forward looking and knowing social security rules increase the participation to social insurance system. Furthermore, we confirm the role of age, gender, income and education, to be significant determinants of social insurance demand. We argue these conclusions should have practical policy implications.

Pages: 23 pages
Date: 2018-06-28, Revised 2018-06-28
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Published by The Economic Research Forum (ERF)

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