Findings from Yale University Broaden Understanding of Economics (When Less Is More: Improving Choices In Health Insurance Markets): Economics

2022 OCT 12 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- New research on Economics is the subject of a report. According to news reporting originating from New Haven, Connecticut, by NewsRx correspondents, research stated, “We study the impact of changing choice set size on the quality of choices in health insurance markets. Using novel data on enrolment and medical claims for school district employees in the state of Oregon, we document that the average employee could save $600 by switching to a lower cost plan.”

Funders for this research include NIH National Institute on Aging (NIA), MODA Foundation.

Our news editors obtained a quote from the research from Yale University, “Structural modelling reveals large ‘choice inconsistencies’ such as non-equalization of the dollar spent on premiums and out of pocket, and a novel form of ‘approximate inertia’ where enrolees are excessively likely to switch to other plans that are close to the current plan on the plan design spreadsheet. Variation in the number of plan choices across districts and over time shows that enrolees make lower-cost choices when the choice set is smaller. We show that a curated restriction of choice set size improves choices more than the best available information intervention, partly because approximate inertia lowers gains from new information. We explicitly test and reject the assumption that this is because individuals choose worse from larger choice sets, or ‘choice overload.”

According to the news editors, the research concluded: “Rather, we show that this feature arises from the fact that larger choice sets feature worse choices on average that are not offset by individual re-optimization.”

This research has been peer-reviewed.

For more information on this research see: When Less Is More: Improving Choices In Health Insurance Markets. The Review of Economic Studies, 2022. The Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England.

The news editors report that additional information may be obtained by contacting Jason Abaluck, Yale University, New Haven, CT 06520, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdac050. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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