Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis

57 Pages Posted: 23 Aug 2006 Last revised: 2 Jan 2023

See all articles by Patrick Bajari

Patrick Bajari

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Han Hong

Independent

Ahmed Khwaja

University of Cambridge - Judge Business School; Yale School of Management; Yale University - Cowles Foundation

Date Written: August 2006

Abstract

Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and Retirement Study to estimate a structural model of the demand for health insurance and medical care. Using a two-step semi-parametric estimation strategy we find significant evidence of moral hazard, but not of adverse selection.

Suggested Citation

Bajari, Patrick and Hong, Han and Khwaja, Ahmed, Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis (August 2006). NBER Working Paper No. w12445, Available at SSRN: https://ssrn.com/abstract=923972

Patrick Bajari (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-5319 (Phone)

HOME PAGE: http://www-personal.umich.edu/~bajari/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Han Hong

Independent

Ahmed Khwaja

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
89
Abstract Views
1,275
Rank
153,517
PlumX Metrics