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Probability numeracy and health insurance purchase

Dillingh,Rik
; 
Kooreman,Peter
; 
Potters,Jan
Abstract
This paper provides new field evidence on the role of probability numeracy in health insurance purchase. Our regression results, based on rich survey panel data, indicate that the expenditure on two out of three measures of health insurance first rises with probability numeracy and then falls again. This non-monotonic relationship suggests that probability numeracy affects health insurance decisions through several channels. In the third case—the obligatory Dutch basic health insurance—we find that high levels of probability numeracy coincide with a lower deductible choice. We discuss possible explanations for the patterns we find, including status quo bias and ambiguity aversion, and the related policy implications.
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Date
2016
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Tilburg University Research Output Collection
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Keywords
numeracy, health insurance, risk attitudes, deductible, ambiguity aversion, C23 - Panel Data Models ; Spatio-temporal Models, D03 - Behavioral Microeconomics ; Underlying Principles, D14 - Household Saving; Personal Finance, SDG 1 - No Poverty
Citation
Dillingh, R, Kooreman, P & Potters, J 2016, 'Probability numeracy and health insurance purchase', Economist-Netherlands, vol. 164, no. 1, pp. 19-39. https://doi.org/10.1007/s10645-015-9258-8
URI
https://hdl.handle.net/20.500.14602/65522
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