Willingness-To-Pay vs Administrative Hurdles: Understanding Barriers to Social Insurance Enrollment in Thailand

Many government social insurance policies have low take-up. To understand whether this is due to administrative barriers, information, or low valuation of the insurance, we study an unusual policy experiment in Thailand that offered a very large lump-sum incentive for informal workers in selected provinces to enroll in a voluntary workers’ social insurance program. Using administrative data, we find that the temporary enrollment incentive increased coverage by 67 percentage points – from 6 percent of informal workers to 73 percent – within just a few months. However, 12 months later, only 13 percent of these new enrollees remained in the scheme, much lower than the retention rate of those who joined absent the incentive. By using new enrollees’ choices among insurance tiers to back out a revealed valuation of insurance, we find that those who were induced to enroll by the incentives value insurance less than those who enrolled without. Combined, the results suggest that low social insurance enrollment may be the result of low ex-ante valuations of the insurance, rather than administrative barriers.