Something in the air: pollution and the demand for health insurance

Tom Y Chang; Wei Huang; Yongxiang Wang

doi:10.1093/restud/rdy016

Something in the air: pollution and the demand for health insurance

Tom Y Chang, Wei Huang, Yongxiang Wang

Research output: Contribution to journal › Article › peer-review

176 Citations (Scopus)

Abstract

We find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory. A one standard deviation increase in daily air pollution leads to a 7.2% increase in the number of insurance contracts sold that day. Conditional on purchase, a one standard deviation decrease in air pollution during the cooling-off(i.e. cost-free cancellation) period relative to the order-date level increases the return probability by 4.0%.We explore a range of potential mechanism and find the most support for projection bias and salience.

Original language	English
Pages (from-to)	1609-1634
Number of pages	26
Journal	Review of Economic Studies
Volume	85
Issue number	3
DOIs	https://doi.org/10.1093/restud/rdy016
Publication status	Published - 1 Jul 2018
Externally published	Yes

Keywords

Projection bias
Salience

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10.1093/restud/rdy016

Cite this

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abstract = "We find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory. A one standard deviation increase in daily air pollution leads to a 7.2\% increase in the number of insurance contracts sold that day. Conditional on purchase, a one standard deviation decrease in air pollution during the cooling-off(i.e. cost-free cancellation) period relative to the order-date level increases the return probability by 4.0\%.We explore a range of potential mechanism and find the most support for projection bias and salience.",

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AB - We find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory. A one standard deviation increase in daily air pollution leads to a 7.2% increase in the number of insurance contracts sold that day. Conditional on purchase, a one standard deviation decrease in air pollution during the cooling-off(i.e. cost-free cancellation) period relative to the order-date level increases the return probability by 4.0%.We explore a range of potential mechanism and find the most support for projection bias and salience.

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KW - Salience

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Something in the air: pollution and the demand for health insurance

Abstract

Keywords

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