Propitious selection in insurance

The theory of propitious selection suggests that there are risk-avoiding personalities who both take physical precautions and buy financial security (insurance). Conversely, there are risk seekers who tend to do neither. Survey evidence is presented that is consistent with the theory. Individuals who obtain motor vehicle liability coverage are less likely than others to drink-and-drive, and are more likely to engage in health-beneficial (risk-avoiding) behaviors. Propitious selection may be a general phenomenon promoting favorable selection in many real world insurance markets.This research was supported by the Harvard Injury Control Center, funded by the Centers for Disease Control. Special thanks to Jennifer Carter, Sara Solnick, and also to Beth Sprinkel of the Insurance Research Council. Useful suggestions were received from Eric Latimer, Roger Davis, Marcello Pagano, and anonymous reviewers. The raw data were obtained from the Roper Center for Public Opinion Research in Storrs, Connecticut.     

Is Workers' Compensation a Substitute for Unemployment Insurance?

This paper examines how the Workers' Compensation (WC) and Unemployment Insurance (UI) programs interact to influence the duration of claims due to workplace accidents. We use longitudinal WC administrative micro-data on more than 30,000 workers in the Canadian construction industry for the period 1976–1986. For the estimations, we use the Meyer (1990) semi-parametric proportional hazard model. Our results show, in particular, that a reduction in the UI replacement ratio is associated with an increase in the duration of claims due to severe accidents that are difficult to diagnose. Moreover, the duration of spells on WC is much higher when an accident occurs in December, a month which corresponds to the beginning of the lay-off season in the construction sector. This result is consistent with the fact that WC benefits are more generous than UI benefits in Canada.     

Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance

Traditional insurance contracts do not offer protection against the replacement value of a vehicle. A replacement cost endorsement gives the opportunity to get a new vehicle in the case of a total theft or in the case of total destruction of the car in a road accident. This type of protection was introduced in Canada in the late 1980's. It is also offered in France and many insurers in the United States are going to move in that direction. We propose tests that separate moral hazard from adverse selection in the analysis of the effect of this additional protection on car theft. We show that holders of car insurance policies with a replacement cost endorsement have a higher probability of theft near the end of this additional protection (usually 24 months following the acquisition of a new car). Our tests indicate that this result is a form of ex post moral hazard or opportunistic insurance fraud.     

Insurance with undiversifiable risk: Contract structure and organizational form of insurance firms

Previous explanations of the contract choice and organizational form of insurance firms do not explain, by themselves, the recent proliferation of mutuals and new contract designs. We first present risk-bearing arguments to address these phenomena. We present two forms of insurance. The first is a conventional transfer of risk whereas the second decomposes risk between idiosyncratic and nonidiosyncratic. We show that the latter form leads to more active trade in insurance markets with correlated exposures. Moreover, the decomposed form dominates the simple transfer. These results qualify and extend the work of Borch (1962) and Marshall (1974). Market responses to the recent liability insurance crisis are compatible with these predictions.This research was conducted while G. Dionne was visiting the University of Pennsylvania under grants from Huebner Foundation and CRSH Canada. N. Doherty wishes to acknowledge with thanks support from the National Science Foundation under grant #88-09299. We wish to thank Patricia Danzon, Beverly Dahlby, Claude Fluet, James Garven, Scott Harrington, Howard Kunreuther, Clifford Smith Jr., George Theall, Kip Viscusi, and a referee for helpful comments.     

地方政府债务风险规制的博弈分析

以博弈论为分析工具,文章建立了中央政府与地方政府的静态博弈支付矩阵,通过引入地方政府过度举债被中央政府监管发现后所付出的成本、地方政府债务风险被媒体曝光而导致公众的担忧等变量,在一定程度上解释了中央政府和地方政府在债务风险控制上达成一致的均衡条件;由于地方政府间在发展经济过程中存在竞争关系,因此文章考察了地方政府间举债发展的重复博弈模型,通过引入奖励变量,改变了地方政府过度举债的纳什均衡解。结论为中央政府严格监管与适当奖励的搭配使用可以把地方政府的债务风险规制在合理的水平。     

完善我国失业保险制度的构想

我国的失业保险存在着种种缺陷 ,失业保险是我国社会保险中发展较晚的一个险种 ,它对保障失业人员的基本生活 ,促进再就业 ,促进企业经营机制特别是用人机制改革等方面发挥了积极的作用。进一步发展和完善我国的失业保险 ,就应当在覆盖范围、立法层次、筹资模式方面采取相应的对策。     

Buying Insurance for Disaster-Type Risks: Experimental Evidence

This paper presents a series of experiments that confront subjects with low probability, high loss situations. A rich parameter set is examined and we find subjects respond to low probability, high loss risks in predictable ways. As loss events become more likely, or loss amounts get larger, or the cost of insurance falls, subjects are more likely to buy indemnifying insurance, even for the class of low probability risks that usually presents problems for standard expected utility theory. A novel application of Cameron's method to estimate willingness to pay from dichotomous choice responses allows us to estimate willingness to pay for insurance. We do not observe the bimodal distribution of bids found in other studies of similar risk situations.     

房产“限购令”的救济瓶颈及其突破路径

房产"限购令"作为政府运用公权力干预市场秩序的抽象行政行为,应当确保相对人享有完善的救济体系,这是现代法治的基本原则之一。然而,现行抽象行政行为的救济途径存在瓶颈,通过完善行政复议、行政诉讼、行政补偿等若干路径,可以有效突破上述瓶颈。     

Workers' Compensation and Family and Medical Leave Act Claim Contagion

At $60 billion per year, the workers' compensation system has come under increased scrutiny as firms, insurers, and researchers study the dynamics of claim filing. The Family and Medical Leave Act also covers most workers, and there has been very little research concerning the effects of FMLA legislation on employment. One hitherto neglected research area in both workers' compensation and FMLA is claim contagion. That is, as a claim is filed within a workgroup, does this increase the likelihood that others within the same workgroup will also file claims? We find the answer to be yes. We also find that this contagion effect is subject to diminishing returns to scale, however, in the sense that the claims probability increases at a decreasing rate as fellow employees' claims frequency increases. We argue that this is consistent with a model in which workers learn about filing a workers' compensation or FMLA claim from other workers.     

Religion and relief: the role of religion in mobilizing civil society against global poverty

Abstract

Although global poverty is one of the world's most pressing contemporary problems, there is a lack of political will to address it, and much of the work is left to non-governmental organizations (NGOs)-many of which have religious connections. However, religion's role in this area is surprisingly understudied. In attempting to fill the gap, this study explores what makes religion effective in mobilizing civil society actors to engage in transnational poverty relief and development. The paper examines the salience of religious actors in the field, before developing a theoretical framework to explain this prevalence, employing sociologically based theories of religious social capital, content, and cultural power. Finally, these issues are investigated practically through case studies of two religious NGOs, World Vision New Zealand (WVNZ) and TEAR Fund New Zealand. The findings corroborate the theoretical framework, demonstrating the considerable potential of religion to mobilize civil society in the fight against global poverty.     

The disaster relief and social work after the Wenchuan earthquake in Mainland China

ABSTRACT

This paper mainly focuses on the development of disaster social work in Mainland China and the intervention of social work in disaster relief. Before the Wenchuan earthquake and in the initial stage of post-earthquake, disaster social work was mainly based on individual psychotherapy; from the earthquake to the year of 2012 in which post-earthquake recovery and reconstruction was completed, the disaster relief began to emphasise community building and integration, while the basic framework for disaster social work was also established. Social workers begin to explore the new mode of developmental and localised disaster social work. By combining with the practical experiences from disaster social work, this paper tries to highlight the dilemmas confronting disaster relief in Mainland China and put forward some corresponding countermeasures and suggestions, which could improve the future disaster relief system in Mainland China.     

北京市政府救助困难职工问题探析(1959-1963)

1959-1963年是中国经济、社会处于极端困难的时期,困难职工也大量增加。在这种形势下,党和政府投入巨额资金和大量精力对困难职工实施了积极、及时的救助。救助工作不仅帮助困难职工度过了暂时的生活困难,而且密切了党同群众的关系,鼓舞了职工战胜困难的信心和勇气,促进了生产的恢复和发展,保证了社会秩序的稳定。     

Endogenous risks and the risk premium

This note tries to correct a deficiency of the microeconomic literature on decision making under uncertainty. Indeed, when considering meaningful comparative statics results in situations where risks are at least partially controllable (endogenous), this literature has mostly relied upon the traditional Arrow-Pratt risk aversion functions and has paid very little attention to the definition of the risk premium. However when they defined the risk premium and the risk aversion functions, Arrow and Pratt considered only roulette gambles, i.e. risks totally exogenous to the individual. This note highlights the fact that several definitions of the risk premium may be proposed for endogenous risks. Two of them, already used in the literature, do not preserve the intuitively-appealing properties of the Arrow-Pratt risk premium. An alternative definition is then proposed. It is shown that this new definition of the risk premium applied to endogenous risks exhibits the properties generally admitted for roulette gambles.The three authors have benefitted from Ph. Caperaa's advice and from a referee's comments.     

Unemployment and economic security for young adults in Finland,Norway and Sweden: From unemployment protection to poverty relief

In this study, we investigated if there has been a displacement in the type and coverage of welfare services available for young unemployed adults in Finland, Norway and Sweden over the last two decades. This question is important because a number of studies have argued that the generous unemployment benefits and extensive labour market intervention found in the Nordic welfare states shield young people from the most severe consequences of economic inactivity. In this article, we instead show that during this period, less generous means‐tested unemployment and social assistance benefits have become the most important form of income protection for young people. In evidence, earnings‐related unemployment benefits now cover only 10 per cent of unemployed Swedes and Finns and 45 per cent of unemployed Norwegians aged 24 years or younger. This development marks a significant change in our understanding of unemployment protection for young people in Nordic countries.     

Endogenous risk and protection premiums

Endogenous risk implies an individual perceives he can influence the likelihood that a state of nature will occur. To add structure to endogenous risk models, I define a protection premium for reduced uncertainty about protection efficiency when a stochastic variable enters the probability functionp(x) rather than the utility function. For a binary lottery, a measure of aversion of uncertain protection efficiency(x) =-p(x)/p(x) is defined to unambiguously determine the effects of increased risk on an individual's voluntary contribution to public good supply earmarked to reduce the probability of an undesirable state. Finally, I examine the protection premium in ann-state discrete lottery and when uncertainty exists in both the probability and utility function.     

Insurance buying gamblers

The puzzling coincidence of gambling and insurance has often been analysed by taking recourse to utility functions with convex and concave regions. In this paper we show that it may be optimal for utility maximizing risk seekers to engage in insurance and gambling activities simultaneously. A possible reason for this behavior is that these individuals try to take advantage of a moral hazard situation.     

Optimal Insurance With Divergent Beliefs About Insurer Total Default Risk

This paper extends the classic expected utility theory analysis of optimal insurance contracting to the case where the insurer has a positive probability of total default and the buyer and insurer have divergent beliefs about this probability. The optimal marginal indemnity above the deductible is smaller (greater) than one if the buyer's assessment of default risk is more pessimistic (optimistic) than the insurer's. As an application of the model, we consider the market for reinsurance against catastrophic property loss and propose an expected utility theory explanation for the increasing and concave marginal indemnity schedule observed in this market.     

Risk and Self-Protection: A State-Contingent View

This article is a brief outline of the implications of state-contingent production for the self-insurance problem. A general state-contingent approach to choice and production under uncertainty is presented. Upper and lower bounds for willingness-to-pay for reductions in ambient risk are derived.     

Ethical oxymora for risk assessment practitioners

We define working conditions faced by some practitioners of risk assessment that contradict their formal training and career expectations. Panels of expert risk scientists are used to assess the importance of these ethical oxymora. We offer recommendations aimed at helping risk scientists deal with these contradictions.

An oxymoron is a figure of speech combining contradictory ideas into a useful expression (e.g., sweet sorrow, silent thunder). In this paper we argue that some practitioners of quantitative risk assessment face working conditions that strongly contradict their professional ethos. In the first part of the paper, after briefly defining quantitative risk assessment, we describe four ethical oxymora faced by risk analysts. Second, we describe how we used panels of expert risk scientists to assess the importance of these ethical problems. We offer recommendations aimed at helping risk scientists deal with these oxymora in the last part.     

Working to get fired? Unemployment benefits and employment duration

In many countries, jobseekers are entitled to unemployment benefits (UBs) only if they have previously worked a minimum period of time. This institutional feature creates a sharp change in the disutility from unemployment at UB eligibility and may distort the duration of jobs. In this paper, we evaluate this eligibility effect using a regression discontinuity approach. Our evidence is based on longitudinal social security data from Portugal, where jobseekers are required to work a relatively long period to collect UBs. We find that monthly transitions from employment to unemployment increase by 10% as soon as the eligibility condition is met. This result is driven entirely by transitions to subsidised unemployment, which increase by 20%, as non-subsidised unemployment is not affected. The effects are even larger for the unemployed with high UB replacement ratios or those who meet the eligibility condition from multiple short employment spells. These transitions deserve greater attention from UB agencies and public employment services.