Demographic Factors and Price Distortions in Insurance

28 Pages Posted: 27 Mar 2015

See all articles by Ron Cheung

Ron Cheung

Oberlin College

Cassandra R. Cole

Florida State University - College of Business

David A. MacPherson

Trinity University; IZA Institute of Labor Economics

Kathleen A. McCullough

Florida State University - College of Business

Charles Nyce

Florida State University

Multiple version iconThere are 2 versions of this paper

Date Written: Spring 2015

Abstract

Few papers have analyzed the potential linkages between price distortions and the specific demographic and political traits of customers. The existence of price distortions may have adverse and potentially unintended impacts on certain demographic groups, leading to significant public policy concerns. The current study uses census tract data and rating factors to examine age, income, and race demographics in an effort to determine if any subgroups of the population are adversely impacted by the price distortions of property insurance. The results suggest that Hispanics, lower income households, and specific age groups pay relatively more for insurance coverage than comparison groups.

Suggested Citation

Cheung, Ron and Cole, Cassandra R. and MacPherson, David A. and McCullough, Kathleen A. and Nyce, Charles, Demographic Factors and Price Distortions in Insurance (Spring 2015). Risk Management and Insurance Review, Vol. 18, Issue 1, pp. 1-28, 2015, Available at SSRN: https://ssrn.com/abstract=2585782 or http://dx.doi.org/10.1111/rmir.12027

Ron Cheung (Contact Author)

Oberlin College ( email )

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Cassandra R. Cole

Florida State University - College of Business ( email )

423 Rovetta Business Building
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David A. MacPherson

Trinity University ( email )

San Antonio, TX 78212
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HOME PAGE: http://www.davemacpherson.com

IZA Institute of Labor Economics

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Germany

Kathleen A. McCullough

Florida State University - College of Business ( email )

Department of Risk Management and Insurance
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Tallahassee, FL 32306-1110
United States
850-644-8358 (Phone)
850-644-4077 (Fax)

Charles Nyce

Florida State University ( email )

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349 RBB, College of Business
Tallahassee, FL 32306
United States
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