Modeling Health Insurance Enrollment Decisions in the U.S., Under Preferences Endogeneity: A Bayesian Multinomial Probit Approach

Journal of Global Business and Trade, Vol.12, No.2, pp.1-14

14 Pages Posted: 1 Jun 2017 Last revised: 6 Jul 2017

See all articles by Ibrahim Niankara

Ibrahim Niankara

Al Ain University of Science and Technology

Date Written: October 30, 2016

Abstract

Early work on consumer health insurance preference modeling suggests that workers sorting among employment alternatives reflect their tastes for employment-sponsored health insurance. Focusing on examining the role of health insurance preferences on enrollment decisions into employment sponsored health insurance, this past literature assumes the effects of health insurance preferences to be statistically exogenous. Therefore, extending analysis beyond employment sponsored health insurance preference modeling, while relaxing the exogeneity assumption, this article models the effects of stated consumption preferences for health insurance on revealed choices of health insurance using a framework in which stated consumption preferences are assumed to be endogenous in the statistical sense. A discrete choice analysis is implemented where both stated preferences and choice outcomes are modeled using multinomial probit and estimated within the Bayesian paradigm using a full Gibbs sampler. This estimation strategy is one of the first of its kind in consumer preference modeling, and improves computational efficiency and overall simplicity compared to related work using full information maximum likelihood. The analysis uses data from the 2007 medical expenditure panel survey, and the results provide substantial evidence on the importance of stated consumer preferences on revealed consumption choices of health insurance in the US.

Keywords: Bayesian MCMC, consumer preferences, discrete choice, health insurance, multinomial probit

JEL Classification: C11, C25, C51, I12, I13

Suggested Citation

Niankara, Ibrahim, Modeling Health Insurance Enrollment Decisions in the U.S., Under Preferences Endogeneity: A Bayesian Multinomial Probit Approach (October 30, 2016). Journal of Global Business and Trade, Vol.12, No.2, pp.1-14. Available at SSRN: https://ssrn.com/abstract=2977039

Ibrahim Niankara (Contact Author)

Al Ain University of Science and Technology ( email )

College of Business
Abu Dhabi Campus
Abu Dhabi, 112612
United Arab Emirates
+97126133555 (Phone)
+97124444304 (Fax)

HOME PAGE: http://business.aau.ac.ae/en/business/academic-staff/staff/ibrahim-niankara

Register to save articles to
your library

Register

Paper statistics

Downloads
18
Abstract Views
163
PlumX Metrics