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Insurance design in the presence of safety nets

Teh, Tse-Ling (2017) Insurance design in the presence of safety nets. Journal of Public Economics . ISSN 0047-2727 (In Press)

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Safety net assistance and insurance exist to manage risk and improve welfare. This shared goal may lead to crowding out. In a new approach, this paper analyzes the interaction of assistance with two dimensions of insurance design: level of coverage and types of risks covered. In a society of risk averse vulnerable individuals and risk neutral assistance providers, Pareto improvements in welfare are achieved through incom- pleteness in the types of risks covered. The results imply that safety nets promote demand for and the emergence of incomplete insurance. These results have a wide application to insurance markets where safety nets are available, including health care, disaster aid and social welfare.

Item Type: Article
Official URL:
Additional Information: © 2017 Elsevier
Library of Congress subject classification: H Social Sciences > HG Finance
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 20 Mar 2017 09:49

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