Individual Portfolio Choice When Getting Sick: The Role of Insurance Coverage

31 Pages Posted: 3 Oct 2011

See all articles by Maude Toussaint-Comeau

Maude Toussaint-Comeau

Federal Reserve Bank of Chicago

Jonathan Hartley

University of Chicago

Date Written: August 18, 2011

Abstract

The effect of a decline in health on individual portfolio choice and the influence of insurance holdings on such asset allocation has been unclear. Using data from working and retired individuals in the Survey of Income and Program Participation between 2001 and 2004, we find that insured individuals are more likely to divest from riskier asset classes after a decline in self-reported health, relative to uninsured cohorts, controlling for income, age, and out-of-pocket medical expenses. Consistent with a domain-general theory of risk, the relationship between poor health and increased aversion to riskier assets is strongest among couples and older households.

Suggested Citation

Toussaint-Comeau, Maude and Hartley, Jonathan, Individual Portfolio Choice When Getting Sick: The Role of Insurance Coverage (August 18, 2011). Midwest Finance Association 2012 Annual Meetings Paper. Available at SSRN: https://ssrn.com/abstract=1912024 or http://dx.doi.org/10.2139/ssrn.1912024

Maude Toussaint-Comeau (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 S. LaSalle St.
Chicago, IL 60604
United States
312-322-8443 (Phone)

Jonathan Hartley

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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