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Modeling Health Insurance Choice Using the Heterogeneous Logit Model

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  • Keane, Michael

Abstract

Recent advances in "simulation based inference" have made it feasible to estimate discrete choice models with several alternatives and rich patterns of consumer taste heterogeneity. These new methods have important potential application in health economics. One important application is the analysis of consumer choice behavior in insurance markets characterized by competition among several alternative insurance plans. Analysis of consumer choice behavior in insurance markets is of great interest in health economics for a number of reasons. For example, the longstanding interest in optimal design of insurance markets stems from the inefficiency of competitive equilibrium in these markets. But a deep understanding of the structure of consumer taste heterogeneity is necessary before one can hope to achieve an optimal design of insurance markets. New methods of choice modeling (like the heterogeneous logit) offer hope of providing such an understanding.

Suggested Citation

  • Keane, Michael, 2004. "Modeling Health Insurance Choice Using the Heterogeneous Logit Model," MPRA Paper 55203, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55203
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    References listed on IDEAS

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    Cited by:

    1. Hanming Fang & Michael P. Keane & Dan Silverman, 2008. "Sources of Advantageous Selection: Evidence from the Medigap Insurance Market," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 303-350, April.
    2. Ching, Andrew T. & Hayashi, Fumiko, 2010. "Payment card rewards programs and consumer payment choice," Journal of Banking & Finance, Elsevier, vol. 34(8), pages 1773-1787, August.
    3. Susan Athey & Guido W. Imbens, 2007. "Discrete Choice Models With Multiple Unobserved Choice Characteristics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(4), pages 1159-1192, November.

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    More about this item

    Keywords

    Choice modeling; heterogeneous logit; simulation estimation; health insurance; adverse selection;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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