Sources of Advantageous Selection: Evidence from the Medigap Insurance Market

Hanming Fang (), Michael P Keane () and Dan Silverman

Journal of Political Economy, 2008, vol. 116, issue 2, pages 303-350

Abstract: 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. (c) 2008 by The University of Chicago. All rights reserved..

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.journals.uchicago.edu/doi/pdf/10.1086/587623 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Sources of Advantageous Selection: Evidence from the Medigap Insurance Market (2006)
Working Paper: Sources of Advantageous Selection: Evidence from the Medigap Insurance Market (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ucp:jpolec:v:116:y:2008:i:2:p:303-350

Ordering information: This journal article can be ordered from
http://www.journals.uchicago.edu/JPE/order1.html

Access Statistics for this article

Journal of Political Economy is edited by Steven D. Levitt, MONIKA PIAZZESI, CANICE PRENDERGAST and ROBERT SHIMER

More articles in Journal of Political Economy from University of Chicago Press
Address: The University of Chicago Press, Journals Division, P.O. Box 37005 Chicago, IL 60637
Series data maintained by Christopher F. Baum ().