Estimating Welfare in Insurance Markets Using Variation in Prices
展示了如何利用保险价格变动数据，结合需求与成本曲线，量化市场定价低效导致的福利损失，并以一家公司的雇主健康保险数据为例，发现逆向选择存在但福利损失较小。
We provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection. We then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance. Such variation, together with quantity data, allows us to estimate the demand for insurance. The same variation, together with cost data, allows us to estimate how insurer's costs vary as market participants endogenously respond to price. The slope of this estimated cost curve provides a direct test for both the existence and nature of selection, and the combination of demand and cost curves can be used to estimate welfare. We illustrate our approach by applying it to data on employer-provided health insurance from one specific company. We detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small, in both absolute and relative terms.