Reports from Aarhus University Provide New Insights into Public Economics (Spot Price Biases In Non-linear Health Insurance Contracts): Economics – Public Economics

2021 NOV 05 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Data detailed on Economics - Public Economics have been presented. According to news reporting from Aarhus, Denmark, by NewsRx journalists, research stated, “We study an apparent schism in the literature concerned with non-linear health insurance plans: con -sumers exposed to the same type of policy appear forward-looking and rational in their response to one policy feature - the end-of-year coverage reset - but not to another - that current prices depend on the year-to-date spending in a non-linear fashion. We exploit policy variation from within a unified institutional environment and uses of population-wide data.”

The news correspondents obtained a quote from the research from Aarhus University, “We replicate both phenomena empirically: consumers both shift the timing of their purchases in response to the end-of-year reset and react exces-sively to spot prices during the coverage year. Importantly, however, we show that also the end-of-year behavior is due to over-attention to short-run prices. Specifically, consumers respond entirely to the large and salient change in the spot price in connection with the reset of the coverage year, conditional on the true expected price change.”

According to the news reporters, the research concluded: “We find that liquidity constraints, rather than plan literacy and cognitive decline are important for understanding the spot price bias.”

This research has been peer-reviewed.

For more information on this research see: Spot Price Biases In Non-linear Health Insurance Contracts. Journal of Public Economics, 2021;203:104508. Journal of Public Economics can be contacted at: Elsevier Science Sa, PO Box 564, 1001 Lausanne, Switzerland. (Elsevier - www.elsevier.com; Journal of Public Economics - http://www.journals.elsevier.com/journal-of-public-economics/)

Our news journalists report that additional information may be obtained by contacting Marianne Simonsen, Aarhus University, Dept. of Economics and Business Economics, Fuglesangs Alle 4, Dk-8210 Aarhus V, Denmark. Additional authors for this research include Lars Skipper, Niels Skipper and Anne Illemann Christensen.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jpubeco.2021.104508. 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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