Something in the Air: Pollution and the Demand for Health Insurance

• Autores: Tom Y. Chang, Wei Huang, Yongxiang Wang
• Localización: Review of economic studies, ISSN 0034-6527, Vol. 85, Nº 3, 2018, págs. 1609-1634
• Idioma: inglés
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• Resumen

  • We find that daily air pollution levels have a significant effect on the decision to purchase or cancel health insurance in a manner inconsistent with rational choice theory. A one standard deviation increase in daily air pollution leads to a 7.2% increase in the number of insurance contracts sold that day. Conditional on purchase, a one standard deviation decrease in air pollution during the cooling-off (i.e. cost-free cancellation) period relative to the order-date level increases the return probability by 4.0%. We explore a range of potential mechanism and find the most support for projection bias and salience.