EuHEA Seminar: Zarko Kalamov (University of Technology Berlin)

Zarko Kalamov

Abstract

This paper uses a sufficient statistic approach to estimate risk aversion in the context of health insurance. First, I develop a model of health insurance demand, with (possibly) distorted individual risk perceptions. Second, I show that risk preferences establish a strict relationship between three elasticities of health insurance demand: the compensated price, income, and public insurance coverage elasticities. Lastly, I use estimates of these elasticities from the US health insurance market to measure both the underlying relative and absolute risk aversion. The estimation method does not require measurement of individual risk perceptions, or to make structural assumptions about utility. An extension to ex-post moral hazard does not affect the results significantly.

Discussant: Peter Zweifel (University of Zurich)

Chair: Mathias Kifmann (University of Hamburg)