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Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation

Author

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  • Shin-Yi Chou

    (Department of Economics, Lehigh University, USA, and National Bureau of Economics Research, USA)

  • Jin-Tan Liu

    (Department of Economics, National Taiwan University, Taiwan, and National Bureau of Economics Research, USA)

  • Cliff J. Huang

    (Department of Economics, Vanderbilt University, USA)

Abstract

Individuals save for future uncertain health care expenses. This is less efficient than pooling health risk through insurance. The provision of comprehensive health insurance may raise welfare by providing the missing market to smooth out consumption through the life cycle. We employ a semiparametric smooth coefficient model to examine the effects of the introduction of the National Health Insurance in Taiwan in 1995 on savings and consumption over the life cycle. The idea is to estimate the coefficients of health insurance which vary with age. Our results suggest that younger households are more sensitive to the risk reductions, and that they demonstrate a greater response in the reduction of their precautionary saving. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Shin-Yi Chou & Jin-Tan Liu & Cliff J. Huang, 2004. "Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(3), pages 295-322.
  • Handle: RePEc:jae:japmet:v:19:y:2004:i:3:p:295-322
    DOI: 10.1002/jae.735
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    References listed on IDEAS

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    Cited by:

    1. Sheu, Ji-Tian & Lu, Jui-fen Rachel, 2014. "The spillover effect of National Health Insurance on household consumption patterns: Evidence from a natural experiment in Taiwan," Social Science & Medicine, Elsevier, vol. 111(C), pages 41-49.
    2. Liu, Weiwei, 2015. "Gasoline taxes or efficiency standards? A heterogeneous household demand analysis," Energy Policy, Elsevier, vol. 80(C), pages 54-64.
    3. Chung-Ming Kuan & Chien-Liang Chen, 2013. "Effects of National Health Insurance on precautionary saving: new evidence from Taiwan," Empirical Economics, Springer, vol. 44(2), pages 921-943, April.
    4. Taiyo Fukai & Hidehiko Ichimura & Kyogo Kanazawa, 2018. "Quantifying Health Shocks Over the Life Cycle," Papers 1801.08746, arXiv.org.
    5. Tran, Chung & Woodland, Alan, 2014. "Trade-offs in means tested pension design," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 72-93.
    6. FUKAI Taiyo & ICHIMURA Hidehiko & KANAZAWA Kyogo, 2018. "Quantifying Health Shocks over the Life Cycle," Discussion papers 18014, Research Institute of Economy, Trade and Industry (RIETI).
    7. Thomas Gries & Ha van Dung, 2014. "Household Savings and Productive Capital Formation in Rural Vietnam: Insurance vs. Social Network," Working Papers CIE 81, Paderborn University, CIE Center for International Economics.
    8. Cliff J. Huang & Tsu-Tan Fu & Hung-Pin Lai & Yung-Lieh Yang, 2017. "Semiparametric smooth coefficient quantile estimation of the production profile," Empirical Economics, Springer, vol. 52(1), pages 373-392, February.

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