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Social and Behavioral Sciences Commons™
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Articles 1 - 8 of 8
Full-Text Articles in Social and Behavioral Sciences
Risk Classification And Health Insurance, Georges Dionne, Casey G. Rothschild
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.
Optimal Taxation With Rent-Seeking, Casey G. Rothschild, Florian Scheuer
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 …
Enhancing Retirement Security Through The Tax Code: The Efficacy Of Tax-Based Subsidies In Life Annuity Markets, William M. Gentry, Casey G. Rothschild
Enhancing Retirement Security Through The Tax Code: The Efficacy Of Tax-Based Subsidies In Life Annuity Markets, William M. Gentry, Casey G. Rothschild
Economics Faculty Scholarship
The under-development of existing annuity markets coupled with the secular trend away from traditional pensions towards defined contribution accounts in the U.S. raises significant con- cerns about the adequacy of retirement income for future retirees. We develop dynamic pro- gramming techniques to evaluate the efficacy of policies designed to address this concern by encouraging annuitization. Our analysis suggests that policies providing monetary incentives through the tax code can indeed significantly enhance annuitization among retirees : our central estimates suggest that tax-exemption based policies which have been recently proposed in Congress have the potential to increase annuitization by as much as …
The Welfare Costs Of Market Restrictions, David Colander, Sieuwerd Gaastra, Casey Rothschild
The Welfare Costs Of Market Restrictions, David Colander, Sieuwerd Gaastra, Casey Rothschild
Economics Faculty Scholarship
In most introductory and intermediate microeconomics textbooks, the measurable welfare effects of price controls, quantitative restrictions, and market restrictions more generally, are depicted as a Harberger triangle. This depiction understates these restrictions’ inefficiency costs because it captures only the ‘‘top-down’’ distortion caused by the wedge these restrictions drive between market-wide quantity demanded and quantity supplied. It ignores the ‘‘bottom-up’’ distortions caused by allocative inefficiencies on the constrained side of the market. In this article we describe a simple graphical exposition of these bottom-up distortions. We argue that this graph can provide students with a picture of both the top-down and …
Adverse Selection In Annuity Markets: Evidence From The British Life Annuity Act Of 1808, Casey Rothschild
Adverse Selection In Annuity Markets: Evidence From The British Life Annuity Act Of 1808, Casey Rothschild
Economics Faculty Scholarship
We study adverse selection using data from an 1808 Act of British Parliament that effectively opened a market for life annuities. Our analysis indicates significant selection effects. The evidence for ad- verse selection is strongest for a sub-sample of annuitants whose an- nuities were purchased by profit-seeking speculators, a sub-sample in which “advantageous selection” resulting from multi-dimensional het- erogeneity is unlikely to have been significant. These results support the view that adverse selection can be masked by advantageous se- lection in empirical studies of standard insurance markets. JEL N23 D82.
The Evolution Of Reciprocity In Sizable Human Groups, Casey G. Rothschild
The Evolution Of Reciprocity In Sizable Human Groups, Casey G. Rothschild
Economics Faculty Scholarship
The scale and complexity of human cooperation is an important and unresolved evo- lutionary puzzle. This article uses the finitely repeated n person Prisoners’ Dilemma game to illustrate how sapience can greatly enhance group-selection effects and lead to the evolutionary stability of cooperation in large groups. This affords a simple and direct explanation of the human “exception.”
Redistribution By Insurance Market Regulation: Analyzing A Ban On Gender-Based Retirement Annuities, Amy Finkelstein, James Poterba, Casey Rothschild
Redistribution By Insurance Market Regulation: Analyzing A Ban On Gender-Based Retirement Annuities, Amy Finkelstein, James Poterba, Casey Rothschild
Economics Faculty Scholarship
This paper illustrates how a model of an insurance market with asymmetric information can be calibrated and solved to evaluate the economic consequences of government regulation. We estimate the impact of restricting gender-based pricing in the United Kingdom retirement annuity market, a market in which individuals are required to annuitize their retirement savings by selecting among a range of different annuity contracts. After calibrating a lifecycle utility model and estimating a model of annuitant mortality that allows for unobserved heterogeneity, we solve for the range of equilibrium contract structures with and without gender-based insurance pricing. Eliminating gender-based annuity pricing is …
Payoff Continuity In Incomplete Information Games: A Comment, Casey G. Rothschild
Payoff Continuity In Incomplete Information Games: A Comment, Casey G. Rothschild
Economics Faculty Scholarship
Kajii and Morris (J. Econ. Theory 1998, 267-276) provide necessary and sufficient conditions for two priors to be strategically close. The restrictiveness of these con- ditions establishes that strategic behavior can be highly sensitive to the assumed prior. Their results thus recommend care in the use of priors in economic modelling. Unfortunately, their proof of a central proposition fails for zero probability types. This comment corrects their proof to account for these cases.