Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2015-10-26
Number: 15-120/V
Author-Name: Zelalem Yilma
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Owen O’Donnell
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Anagaw Mebratie
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Getnet Alemu
Author-Workplace-Name: Addis Ababa University, Ethiopia
Author-Name: Arjun S. Bedi
Author-Workplace-Name: Erasmus University Rotterdam, the Netherlands
Title: Subjective Expectations of Medical Expenditures and Insurance in Rural Ethiopia
Abstract: Little is known about perceptions of medical expenditure risks despite their presumed relevance to health insurance demand. This paper reports on a unique elicitation of subjective probabilities of medical expenditures from rural Ethiopians who are offered the opportunity to purchase health insurance. We find that expectations are positively correlated with past expenses to a degree that exceeds the serial correlation in realized expenditures, suggesting overestimation of persistence and underestimation of the potential gains from insurance. Despite the fact that forecast expenditures do predict realized expenditures to some extent, there is no evidence that expectations influence the decision to take out health insurance, although plans to insure are positively related to the perceived dispersion of medical expenses.
Classification-JEL: D82, D84, I13, O12
Keywords: Subjective probability, medical expenditure, out-of-pocket payments, adverse selection, health insurance, Ethiopia
File-Url: https://papers.tinbergen.nl/15120.pdf
File-Format: application/pdf
File-Size: 475415 bytes
Handle: RePEc:tin:wpaper:20150120