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Risk Classification And Health Insurance, Georges Dionne, Casey G. Rothschild Nov 2011

Risk Classification And Health Insurance, Georges Dionne, Casey G. Rothschild

Economics Faculty Scholarship

Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. An efficient risk classification system generates premiums that fully reflect the expected cost associated with each class of risk characteristics. This is known as financial equity. In the health sector, risk classification is also subject to concerns about social equity and potential discrimination. We present different theoretical frameworks that illustrate the potential trade-off between efficient insurance provision and social equity. We also review empirical studies on risk classification and residual asymmetric information.


Is Being In School Better? The Impact Of School On Children’S Bmi When Starting Age Is Endogenous, Patricia M. Anderson, Kristin F. Butcher, Elizabeth U. Cascio, Diane Whitmore Schanzenbach Sep 2011

Is Being In School Better? The Impact Of School On Children’S Bmi When Starting Age Is Endogenous, Patricia M. Anderson, Kristin F. Butcher, Elizabeth U. Cascio, Diane Whitmore Schanzenbach

Faculty Research and Scholarship

In this paper, we investigate the impact of attending school on body weight and obesity using a regression-discontinuity design. As is the case with academic outcomes, school exposure is related to unobserved determinants of weight outcomes because some families choose to have their child start school late (or early). If one does not account for this endogeneity, it appears that an additional year of school exposure results in a greater BMI and a higher probability of being overweight or obese. When we compare the weight outcomes of similar age children with one versus two years of school exposure due to …


Optimal Taxation With Rent-Seeking, Casey G. Rothschild, Florian Scheuer Sep 2011

Optimal Taxation With Rent-Seeking, Casey G. Rothschild, Florian Scheuer

Economics Faculty Scholarship

Recent policy proposals have suggested taxing top incomes at very high rates on the grounds that some or all of the highest wage earners are engaged in socially unpro- ductive or counterproductive activities, such as externality imposing speculation in the financial sector. To address this, we provide a model in which agents can choose between working in a traditional sector, where private and social products coincide, and a crowdable rent-seeking sector, where some or all of earned income reflects the capture of pre-existing output rather than increased production. We character- ize Pareto optimal linear and non-linear income tax systems under …


The Market Crash And Mass Layoffs: How The Current Economic Crisis May Affect Retirement, Courtney C. Coile, Phillip B. Levine Apr 2011

The Market Crash And Mass Layoffs: How The Current Economic Crisis May Affect Retirement, Courtney C. Coile, Phillip B. Levine

Economics Faculty Scholarship

Recent dramatic declines in U.S. stock and housing markets have led to widespread speculation that shrinking retirement accounts and falling home equity will lead workers to delay retirement. Yet the weakness in the labor market and its impact on retirement are often overlooked. If older job seekers have difficulty finding work, they may retire earlier than expected. The net effect of the current economic crisis on retirement is thus far from clear. In this paper, we use 30 years of data from the March Current Population Survey to estimate models relating retirement decisions to fluctuations in equity, housing, and labor …