Overconfidence and Health Insurance Participation Among the Elderly

63 Pages Posted: 16 Nov 2015

See all articles by Wei Huang

Wei Huang

Harvard University - Department of Economics; NBER; IZA Institute of Labor Economics

Mi Luo

New York University (NYU)

Abstract

People may have imperfect information about their health status and thus make suboptimal decisions in insurance participation. Using national representative samples of the elderly in US and China, we find that people with lower socio-economic status and poorer health are relatively less likely to realize how unhealthy they are and this overconfidence is associated with no insurance participation. Accurate health information provided through physical examinations induces relatively higher participation among the overconfident people afterwards. These findings contribute a new explanation for the insufficient participation and advantageous selection in health insurance, and provide new insights on the insurance market and policy suggestions.

Keywords: overconfidence, health, health insurance participation

JEL Classification: I12, I13, J14

Suggested Citation

Huang, Wei and Luo, Mi, Overconfidence and Health Insurance Participation Among the Elderly. IZA Discussion Paper No. 9481, Available at SSRN: https://ssrn.com/abstract=2690730

Wei Huang (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Mi Luo

New York University (NYU) ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

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