A Continuous Theory of Income Insurance
AbstractIn this paper we treat an individual’s health as a continuous variable, in contrast to the traditional literature on income insurance, where it is regularly treated as a binary variable. This is not a minor technical matter; in fact, a continuous treatment of an individual’s health sheds new light on the role and functioning of income insurance and makes it possible to capture a number of real-world phenomena that are not easily captured in binary models. In particular, moral hazard is not regarded as outright fraud, but as a gradual adjustment of the willingness to go to work when income insurance is available. Further, the model can easily encompass phenomena such as administrative rejection of claims and the role of social norms. It also gives a rich view of the desirability of insurance in the first place.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3097.
Date of creation: 2010
Date of revision:
moral hazard; disability insurance; sick pay; work absence; social norms;
Other versions of this item:
- Lindbeck, Assar & Persson, Mats, 2010. "A Continuous Theory of Income Insurance," Working Paper Series 840, Research Institute of Industrial Economics.
- Lindbeck, Assar & Persson, Mats, 2010. "A Continuous Theory of Income Insurance," Seminar Papers 763, Stockholm University, Institute for International Economic Studies.
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
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