Evolving Choice Inconsistencies in Choice of Prescription Drug Insurance

Jason Abaluck and Jonathan Gruber

No 19163, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study choice over prescription insurance plans by the elderly using government administrative data to evaluate how these choices are made and evolve over time. We find that there is large "foregone savings" from not choosing the lowest cost plan that has grown over time. We develop a structural framework that allows us to exactly decompose the changes in "foregone welfare" from inconsistent choices into supply and demand side factors. We find that foregone welfare increases over time due primarily to supply-side factors such as premiums and out-of-pocket costs; we estimate little learning at either the individual or cohort level.

JEL-codes: I11 I18 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-hea and nep-ias
Note: AG EH PE
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Citations: View citations in EconPapers (14)

Published as Jason Abaluck & Jonathan Gruber, 2016. "Evolving Choice Inconsistencies in Choice of Prescription Drug Insurance," American Economic Review, vol 106(8), pages 2145-2184.

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