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 Research Institute of Industrial Economics in its series Working Paper Series with number 840.
Length: 44 pages
Date of creation: 08 Jun 2010
Date of revision:
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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," Seminar Papers 763, Stockholm University, Institute for International Economic Studies.
- Assar Lindbeck & Mats Persson, 2010. "A Continuous Theory of Income Insurance," CESifo Working Paper Series 3097, CESifo Group Munich.
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
- H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
- I38 - Health, Education, and Welfare - - Welfare 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-CTA-2010-06-18 (Contract Theory & Applications)
- NEP-IAS-2010-06-18 (Insurance Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lindbeck, Assar & Persson, Mats, 2006.
"A Model of Income Insurance and Social Norms,"
Working Paper Series
659, Research Institute of Industrial Economics.
- Assar Lindbeck & Mats Persson, 2006. "A Model of Income Insurance and Social Norms," CESifo Working Paper Series 1675, CESifo Group Munich.
- Lindbeck, Assar & Persson, Mats, 2006. "A Model of Income Insurance and Social Norms," Seminar Papers 742, Stockholm University, Institute for International Economic Studies.
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NBER Working Papers
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92-5, Massachusetts Institute of Technology (MIT), Department of Economics.
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