Search

The employer‐sponsored life insurance (ESLI) market is susceptible to adverse selection due to community‐rated premiums, guaranteed issue coverage, and the existence of an individual market. Using payroll and healthcare claims data from a large university, we find that employees with worse health are more likely to elect coverage causing adverse selection in supplemental ESLI. Nonetheless, we find employees typically do not increase coverage following a severe illness even when they can without providing evidence of insurability. Furthermore, demand estimation shows employees are not price‐sensitive and estimated increases in premiums from adverse selection are unlikely to cause significant welfare loss. [ABSTRACT FROM AUTHOR]

Using data from a university, we analyze a policy designed to increase employer-sponsored life insurance. The university increased basic life insurance holdings, which nudged employees with supplemental coverage to have more life insurance. In large part due to inertia, the nudge increased life insurance holdings one-for-one for those who could have undone it. Additionally, we find that expanding coverage options significantly increased total life insurance holdings for new hires who were not subject to inertia. These policy changes reduced uninsured vulnerabilities for two-thirds of employees. Our findings have important policy implications for addressing widespread disparities in life insurance coverage. (JEL D31, G22, D03, J32, J33, J38, H20), I. INTRODUCTION Life insurance ownership is at a 50-year low and sales have declined 45% since the mid-1980s (Prudential 2013; Seism 2014). Large disparities exist between life insurance holdings and [...]

Some goods are consumed not just for their intrinsic utility but also for the impression their consumption has on others. We analyze the market for such a commodity--diamonds. We collect data on price and other attributes from the inventories of three large online retailers of diamonds. We find that people are willing to pay premiums upward of 18% for a diamond that is one-half carat rather than slightly less than a half carat and between 5% and 10% for a one-carat rather than a slightly less than one-carat stone. Since a major portion of larger gem-quality diamonds are used for engagement rings, such an outcome is consistent with Bernheim's model of conformism, where individuals try to conform to a single standard of behavior that is often established at a focal point. In this case, prospective grooms signal their desirability as a mate by the size of the diamond engagement ring they give their fiancees. (JEL A1, D4), I. INTRODUCTION Diamonds have long intrigued economists. Adam Smith and the classical economists asked why diamonds, which have so little value in use, have such high value in exchange. It [...]

AARON S. YELOWITZ [*] This article assesses the importance of receiving supplemental health insurance on participation in Supplemental Security Income (SSI) for the elderly. The implementation of the Qualified Medicare [...]