Arbeitspapier
Privatizing disability insurance
Public disability insurance (DI) programs in many countries face pressure to reduce their generosity in order to remain sustainable. In this paper, we investigate the welfare effects of giving a larger role to private insurance markets in the face of public DI cuts. Exploiting a unique reform that abolished one part of the German public DI system for younger workers, we find that despite significant crowding-in effects, overall private DI take-up remains modest. We do not find any evidence of adverse selection on unpriced risk. On the contrary, private DI tends to be concentrated among high-income, high-education and low-risk individuals. Using a revealed preferences approach, we estimate individual DI valuations, a key input for welfare calculations. We find that observed willingness-to-pay of many individuals is low, such that providing DI partly via a private insurance market with choice improves welfare. However, we show that distributional concerns as well as individual risk misperceptions can provide grounds for justifying a full public DI mandate.
- Sprache
-
Englisch
- Erschienen in
-
Series: ECONtribute Discussion Paper ; No. 190
- Klassifikation
-
Wirtschaft
Social Security and Public Pensions
Insurance; Insurance Companies; Actuarial Studies
- Thema
-
disability insurance
social insurance
mandate
privatization
risk-based selection
welfare
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Seibold, Arthur
Seitz, Sebastian
Siegloch, Sebastian
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
- (wo)
-
Bonn and Cologne
- (wann)
-
2022
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Seibold, Arthur
- Seitz, Sebastian
- Siegloch, Sebastian
- University of Bonn and University of Cologne, Reinhard Selten Institute (RSI)
Entstanden
- 2022
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