The life insurance market: Asymmetric information revisited

• 成果类型: Article
• 署名作者: He, Daifeng
• 署名单位: William & Mary
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2009.07.001
• 发表日期: 2009
• 页码: 1090-1097
• 关键词: Asymmetric information; private information; Life insurance; sample selection; Differential mortality; New buyers; Health status; Pricing factors; Risk classification

摘要

This paper finds evidence for the presence of asymmetric information in the life insurance market, a conclusion contrasting with the existing literature. In particular, we find a significant and positive correlation between the decision to purchase life insurance and subsequent mortality, conditional on risk classification. Individuals who died within a 12-year time window after a base year were 19% more likely to have taken up life insurance in that base year than were those who survived the time window. Moreover, as might be expected when individuals have residual private information, we find that the earlier an individual died, the more likely she was to have initially bought insurance. The primary factor driving the difference between our and the prior literature's findings is that we focus on a sample of potential new buyers, rather than on the entire cross section, to address the sample selection problem induced by potential mortality differences between those with and those without coverage. (C) 2009 Elsevier B.V. All rights reserved.