Social Learning and Health Insurance Enrollment: Evidence from China's New Cooperative Medical Scheme

Posted: 16 Feb 2017

See all articles by Hong Liu

Hong Liu

Central University of Finance and Economics (CUFE)

Qi Sun

Shanghai University of Finance and Economics-College of Business

Zhong Zhao

Institute for the Study of Labor (IZA); Renmin University of China

Date Written: October 17, 2013

Abstract

This paper examines the role of social learning in household enrollment decisions for the New Cooperative Medical Scheme (NCMS) in rural China by estimating a static game with incomplete information. Using a rich dataset from the China Health and Nutrition Survey, we find that a 10-percentage-point increase in the enrollment rate in a village increases one's take-up probability by 5 percentage points. Using multiple model specifications, we show that the estimated social effects are not driven by simultaneity or common unobserved factors but are consistent with the hypothesis of social learning. We also find that the importance of social effects decreases significantly with households’ familiarity with the NCMS as well as with the development of alternative information channels, which further ascertains that the primary mechanism for the social effects is social learning. The evidence suggests that healthier, wealthier, relatively well-educated, older Han male household heads tend to be opinion leaders.

Keywords: Rural China, Health insurance, Social learning, Peer effects

JEL Classification: I1, D83

Suggested Citation

Liu, Hong and Sun, Qi and Zhao, Zhong, Social Learning and Health Insurance Enrollment: Evidence from China's New Cooperative Medical Scheme (October 17, 2013). Journal of Economic Behavior and Organization, Vol. 94, 2014, Available at SSRN: https://ssrn.com/abstract=2918619

Hong Liu

Central University of Finance and Economics (CUFE)

39 South College Road
Haidian District
Beijing, Beijing 100081
China

Qi Sun (Contact Author)

Shanghai University of Finance and Economics-College of Business ( email )

777 Guoding Road
Shanghai, 200433
China

Zhong Zhao

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

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