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Social Defaults and Plan Choice: The Case of Spousal Following

Author

Listed:
  • Gross, Tal
  • Layton, Tim
  • Prinz, Daniel
  • Yates, Julia

Abstract

This paper studies how couples in the Medicare Part D program choose an insurance plan. Over 70 percent of enrollees choose the same plan as their spouse. Even among those with differing health care needs, well over half do so. Discrete- choice models suggest that beneficiaries place a value of more than $1,000 per year on being on the same plan as their spouse. Using a regression-discontinuity design, the paper shows that younger spouses disproportionately follow their older spouse’s plan choice. Joint plan choice contributes modestly to overall overspending, but increases costs substantially for couples with different cost-minimizing plans.

Suggested Citation

  • Gross, Tal & Layton, Tim & Prinz, Daniel & Yates, Julia, 2025. "Social Defaults and Plan Choice: The Case of Spousal Following," Policy Research Working Paper Series 11207, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11207
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    References listed on IDEAS

    as
    1. Kate Ho & Joseph Hogan & Fiona Scott Morton, 2017. "The impact of consumer inattention on insurer pricing in the Medicare Part D program," RAND Journal of Economics, RAND Corporation, vol. 48(4), pages 877-905, December.
    2. Tomas Pedro Sanguinetti, 2019. "How Do Couples Choose Individual Insurance Plans? Evidence from Medicare Part D," 2019 Papers psa1760, Job Market Papers.
    3. Zarek Brot-Goldberg & Timothy Layton & Boris Vabson & Adelina Yanyue Wang, 2023. "The Behavioral Foundations of Default Effects: Theory and Evidence from Medicare Part D," American Economic Review, American Economic Association, vol. 113(10), pages 2718-2758, October.
    4. Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1149-1187.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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