Rev Econ Stat. 2023 Mar;105(2):237-257. doi: 10.1162/rest_a_01070. Epub 2021 Jul 9.
ABSTRACT
Insurance markets often feature consumer sorting along both an extensive margin (whether to buy) and an intensive margin (which plan to buy). We present a new graphical theoretical framework that extends a workhorse model to incorporate both selection margins simultaneously. A key insight from our framework is that policies aimed at addressing one margin of selection often involve an economically meaningful trade-off on the other margin in terms of prices, enrollment, and welfare. Using data from Massachusetts, we illustrate these trade-offs in an empirical sufficient statistics approach that is tightly linked to the graphical framework we develop.
PMID:37193577 | PMC:PMC10181796 | DOI:10.1162/rest_a_01070
