New Economics Study Findings Have Been Reported by Researchers at Massachusetts Institute of Technology (How You Pay Drives What You Choose: Mental Accounting In Health Insurance Plan Choice): Economics

2026 SEP 15 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Researchers detail new data in Economics. According to news reporting out of Cambridge, Massachusetts, by NewsRx editors, research stated, “We document that the source of funds for paying health insurance premiums has a dramatic impact on plan choices. We focus on the MediSave programme in Singapore, a medical savings account that is used to pay out-of-pocket medical spending.”

Funders for this research include National Natural Science Foundation of China (NSFC), Humanities and Social Sciences Research Foundation of Ministry of Education of China, Singapore’s Ministry of Education Academic Research Fund Tier 1.

Our news journalists obtained a quote from the research from the Massachusetts Institute of Technology, “Residents can also pay their health insurance premiums with cash or MediSave funds, but are subject to limits that vary by age and over time. By exploiting variations in those limits, we consistently find that when individuals are able to pay their health insurance premiums with MediSave funds, they are less price sensitive and more willing to enrol in more generous plans. We develop and estimate a mental accounting model which explains these patterns. We embed and reject alternative explanations such as hassle costs and liquidity constraints. We then extend this model and show that mental accounting can explain much, but not all, of the misweighting of premiums relative to out-of-pocket expenses in health insurance choice.”

According to the news editors, the research concluded: “We also find that allowing MediSave payment for both premiums and out-of-pocket expenses (e.g. putting them in the same mental account) enhances individual welfare and reduces adverse selection.”

This research has been peer-reviewed.

For more information on this research see: How You Pay Drives What You Choose: Mental Accounting In Health Insurance Plan Choice. Review of Economic Studies, 2026. Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Review of Economic Studies - restud.oxfordjournals.org)

Our news journalists report that additional information may be obtained by contacting Jonathan Gruber, Massachusetts Institute of Technology, Cambridge, MA 02139, United States. Additional authors for this research include Mengyun Lin, Haoming Liu and Junjian Yi.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdag086. 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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