RISK ATTITUDES AND THE DEMAND FOR PRIVATE HEALTH INSURANCE: THE IMPORTANCE OF ‘CAPTIVE PREFERENCES’

Joan Costa‐Font and Jaume García‐Villar
Authors registered in the RePEc Author Service: Jaume Garcia Villar

Annals of Public and Cooperative Economics, 2009, vol. 80, issue 4, 499-519

Abstract: ABSTRACT**: Captivity to a mainstream public insurer, is hypothesized to constrain the choice of purchasing private health insurance, by influencing risk attitudes. Namely, risk averse individuals are more likely to stay captive to the National Health System (NHS). To empirically test this hypothesis we use a small scale database from Catalonia to explore the determinants of private health insurance (PHI) purchase under different forms of captivity along with a measure of risk attitudes. Our results confirm that the captivity corrections are significant and can potentially bias the estimates of the demand for PHI. Risk aversion increases the probability of an individual being captive to the NHS. The latter suggests a potential behavioural (or cultural) mechanism to isolate the influence of risk attitudes on the demand for PHI in publicly financed health systems.

Date: 2009
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https://doi.org/10.1111/j.1467-8292.2009.00396.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:annpce:v:80:y:2009:i:4:p:499-519

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