Access to Credit Reduces the Value of Insurance

Sonia Jaffe, Anup Malani and Julian Reif

No 32395, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the value of insurance when individuals have access to credit markets. Loans allow consumers to smooth financial shocks over time, decreasing the value of consumption smoothing from insurance. We derive formulas for the value of insurance that can be taken to data, and show how that value depends on individual characteristics and features of loans. We estimate that access to a five-year loan decreases the values of community- and experience-rated insurance for the average beneficiary by $232-$366 (58--61%). Even for the sickest decile, this loan access reduces the value of community-rated insurance by $1,099 (17%).

JEL-codes: D15 G22 G51 I13 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-ban
Note: EH
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32395.pdf (application/pdf)

Related works:
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:nbr:nberwo:32395

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32395

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().