Do time preferences explain low health insurance take‐up?

Abstract

Low insurance take-up in low-income populations is not easily explained by the standard single-period expected utility model of insurance that overlooks the relevance of time preference when liquidity is constrained. We design field survey instruments to elicit quasi-hyperbolic time preferences, as well as prospect theory risk preferences, and use them to examine whether time preferences explain health insurance behavior of lowincome Filipinos. Consistent with theory, those with stronger parameterized time preference are less likely to insure and the partial association is most pronounced at low wealth where liquidity is most likely to be constrained. Among those with better understanding of insurance, lower take-up is also associated with present bias. We do not find that insurance is significantly associated with risk preferences.

Insurance and portfolio decisions: Two sides of the same coin?

“…The temporal dimension of risky investment decisions, however, is fairly natural. Further, it is increasingly recognized that insurance contracts, under which a premium is paid upfront against a contingent promise of future payments, have a time dimension as well (Casaburi and Willis, 2018, Ericson and Sydnor 2018, Rampini and Viswanathan 2022, Baillon et al 2022. In that case, the demand for risky assets and for insurance could depend on both risk and time preferences.…”

“…The results from Model 1 indicate that regret avoidance shapes portfolio and insurance decisions. In particular, As discussed in appendix D, regret theory is closely related to salience theory (Herweg andMueller 2021, Lanzani 2022), skewness preferences (Gollier 2020) and narrow framing (Barberis, Huang, and Thaler 2006).…”

Assessing health insurance literacy in Switzerland: first results from a measurement tool

“… 17 , 21 , 22 Similarly, more future-oriented individuals may have greater confidence in their knowledge of health insurance decisions, making them more likely to be aware of health insurance details. 23 …”

How do low‐income enrollees in the Affordable Care Act marketplaces respond to cost‐sharing?

“…More recently, Ellis et al (2017) report a wide range of elasticity estimates for 26 different types of care; they calculate an overall elasticity of −0.44 and elasticities for preventive care and ER visits that are close to zero. Other studies have investigated behavioral explanations for low insurance take‐up among low‐income populations (e.g., Baillon et al, 2022). This paper contributes to this rich health economics literature by estimating price elasticities of demand for low‐income ACA Exchanges enrollees in the United States.…”