Quantifying the Premium Externality of the Uninsured

Stephen (Teng) Sun and Constantine Yannelis

Journal of the European Economic Association, 2016, vol. 14, issue 2, 405-437

Abstract: In insurance markets, the uninsured can generate a negative externality on the insured, leading insurance companies to charge higher premia. Using a novel panel data set and a staggered policy change that introduces exogenous variation in the rate of uninsured drivers at the county level in California, we find that uninsured drivers lead to higher insurance premia: a 1 percentage point increase in the rate of uninsured drivers raises premia by roughly 1%. We calculate the monetary fine on the uninsured that would fully internalize the externality and conclude that actual fines in most US states are inefficiently low.

JEL-codes: G22 H23 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1111/jeea.12148 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Journal Article: QUANTIFYING THE PREMIUM EXTERNALITY OF THE UNINSURED (2016)
Working Paper: Quantifying the Premium Externality of the Uninsured (2013)
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: https://EconPapers.repec.org/RePEc:oup:jeurec:v:14:y:2016:i:2:p:405-437.

Access Statistics for this article

Journal of the European Economic Association is currently edited by Romain Wacziarg

More articles in Journal of the European Economic Association from European Economic Association
Bibliographic data for series maintained by Oxford University Press ().