The Politics of Redistributive Social Insurance
This paper analyses the political support for social insurance that includes elements of redistribution when there exists an imperfect private insurance alternative. Individuals differ both in their income and risk. The social insurance is compulsory and charges an income-related contribution with pooling of risks. The private insurance is voluntary and charges a contribution based on individuals. However due to the adverse selection problem, private insurance companies provide only partial insurance. Adopting a non-expected utility model, we show that there is a general majority support for social insurance and that this support is increasing with risk aversion and correlation between risk and income. We also show that a mixed insurance is politically impossible, regardless of the degree of redistribution of social insurance and the joint distribution of risk and income in the population. Lastly, we analyse how the political support for social insurance is affected by any change in its redistributive component and the possibility of using genetic tests.
|Date of creation:||Oct 2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0) 20 7882 5096
Fax: +44 (0) 20 8983 3580
Web page: http://www.econ.qmul.ac.uk
More information through EDIRC
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.:
- repec:cup:cbooks:9780521629560 is not listed on IDEAS
- Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
- Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
- Cremer, H. & Pestieau, P., .
"Redistributive taxation and social insurance,"
CORE Discussion Papers RP
-1235, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Riley, John G, 1985. "Competition with Hidden Knowledge," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 958-76, October.
- Blomqvist, Ake & Horn, Henrik, 1984. "Public health insurance and optimal income taxation," Journal of Public Economics, Elsevier, vol. 24(3), pages 353-371, August.
- Usher, Dan, 1977.
"The welfare economics of the socialization of commodities,"
Journal of Public Economics,
Elsevier, vol. 8(2), pages 151-168, October.
- Dan Usher, 1976. "The Welfare Economics of the Socialization of Commodities," Working Papers 218, Queen's University, Department of Economics.
- Mailath, George J, 1987. "Incentive Compatibility in Signaling Games with a Continuum of Types," Econometrica, Econometric Society, vol. 55(6), pages 1349-65, November.
- Segal, Uzi & Spivak, Avia, 1990.
"First order versus second order risk aversion,"
Journal of Economic Theory,
Elsevier, vol. 51(1), pages 111-125, June.
- Miguel Gouveia, 1997.
"Majority rule and the public provision of a private good,"
Springer, vol. 93(3), pages 221-244, December.
- Gouveia, Miguel, 1997. " Majority Rule and the Public Provision of a Private Good," Public Choice, Springer, vol. 93(3-4), pages 221-44, December.
- Mark J. Machina, 1995. "Non-Expected Utility and The Robustness of the Classical Insurance Paradigm," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 20(1), pages 9-50, June.
- Julia Lynn Coronado & Don Fullerton & Thomas Glass, 2000.
"The Progressivity of Social Security,"
NBER Working Papers
7520, National Bureau of Economic Research, Inc.
- Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
- Eckstein, Zvi & Eichenbaum, Martin & Peled, Dan, 1985. "Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security," Journal of Public Economics, Elsevier, vol. 26(3), pages 303-326, April.
- Mich�le D. Cohen, 1995. "Risk-Aversion Concepts in Expected- and Non-Expected-Utility Models," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 20(1), pages 73-91, June.
- Casamatta, Georges & Cremer, Helmuth & Pestieau, Pierre, 2000.
"Political sustainability and the design of social insurance,"
Journal of Public Economics,
Elsevier, vol. 75(3), pages 341-364, March.
- CASAMATTA, Georges & CREMER, Helmuth & PESTIEAU, Pierre, . "Political sustainability and the design of social insurance," CORE Discussion Papers RP -1449, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jean-Charles Rochet, 1991. "Incentives, Redistribution and Social Insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan, vol. 16(2), pages 143-165, December.
- Anderberg, Dan, 1999. "Determining the mix of public and private provision of insurance by majority rule," European Journal of Political Economy, Elsevier, vol. 15(3), pages 417-440, September.
- Riley, John G, 1979.
Econometric Society, vol. 47(2), pages 331-59, March.
- Doherty, Neil A & Eeckhoudt, Louis, 1995. "Optimal Insurance without Expected Utility: The Dual Theory and the Linearity of Insurance Contracts," Journal of Risk and Uncertainty, Springer, vol. 10(2), pages 157-79, March.
- Wagstaff, Adam & van Doorslaer, Eddy & van der Burg, Hattem & Calonge, Samuel & Christiansen, Terkel & Citoni, Guido & Gerdtham, Ulf-G & Gerfin, Mike & Gross, Lorna & Hakinnen, Unto, 1999. "Equity in the finance of health care: some further international comparisons1," Journal of Health Economics, Elsevier, vol. 18(3), pages 263-290, June.
When requesting a correction, please mention this item's handle: RePEc:qmw:qmwecw:wp444. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nick Vriend)
If references are entirely missing, you can add them using this form.