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Asymmetric Demand Response when Prices Increase and Decrease: The Case of Child Healthcare

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  • Toshiaki Iizuka
  • Hitoshi Shigeoka

Abstract

This study tests whether demand responds symmetrically to price increases and decreases—a seemingly obvious proposition under conventional demand theory that has not been rigorously tested. Exploiting rapid expansion in municipal subsidies for child healthcare in a difference-in-differences framework, we find evidence against it: when coinsurance, our price measure, increases from 0% to 30%, the demand response is more than twice that to a price decrease from 30% to 0%, a result consistent with loss aversion. This result indicates that, while economists and policymakers pay little attention, the price change direction matters, and that welfare analysis should incorporate this direction.

Suggested Citation

  • Toshiaki Iizuka & Hitoshi Shigeoka, 2020. "Asymmetric Demand Response when Prices Increase and Decrease: The Case of Child Healthcare," NBER Working Papers 28057, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28057
    Note: AG CH EH PE
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    1. is not listed on IDEAS
    2. Pennesi, Daniele, 2025. "A behavioral model of consumer response to price information," Journal of Economic Behavior & Organization, Elsevier, vol. 230(C).
    3. Drake, Coleman & Anderson, David & Cai, Sih-Ting & Sacks, Daniel W., 2023. "Financial transaction costs reduce benefit take-up evidence from zero-premium health insurance plans in Colorado," Journal of Health Economics, Elsevier, vol. 89(C).
    4. Kim, Seonghoon & Koh, Kanghyock & Lyou, Wonjun, 2024. "The Effects of Patient Cost-Sharing on Adolescents' Healthcare Utilization and Financial Risk Protection: Evidence from South Korea," IZA Discussion Papers 16897, Institute of Labor Economics (IZA).
    5. Seonghoon Kim & Kanghyock Koh & Wonjun Lyou, 2024. "The effects of patient cost‐sharing on adolescents' healthcare utilization and financial risk protection: Evidence from South Korea," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1009-1023, July.
    6. Norihiro Komura & Shun-ichiro Bessho, 2022. "The Longer-term Impact of Coinsurance for the Elderly - Evidence from High-access Case -," KIER Working Papers 1074, Kyoto University, Institute of Economic Research.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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