Research
Older Americans and Life Insurance
The conventional academic literature suggests that demand for term life insurance should decline post-retirement as income protection becomes less necessary. Yet our study reveals that 30-40\% of individuals aged 65 and older maintain at least one term life policy, some even till their 80s. While employment status influences term life insurance holdings—both through income protection needs and employer-provided benefits—we find that a notable number of term life policyholders aged 65 and older hold policies despite having no life-contingent income sources, such as working income or retirement funds, to protect. This study investigates alternative rationales for holding term life insurance beyond income protection, including caregiving value, bequest motives, funeral expenses, and more. Additionally, we find that once individuals purchase term life insurance, it often becomes optimal for them to continue holding it after a short period, with this effect varying significantly by issue age. While these findings provide initial insights into older age term life insurance holdings, further analysis is needed to fully understand the relative importance of these various motivations, which we explore in this paper.
The Impact of Decision Aids on Health Insurance Selection
High-deductible health plans (HDHPs) often offer lower total costs than traditional plans, yet many eligible individuals choose not to enroll. To understand this gap, we study whether a simple decision aid can improve individuals’ comprehension of cost differences and influence their actual enrollment decisions. Leveraging a large-scale field experiment (N = 2,718) conducted during the open enrollment period, we examine whether two decision aids, a short educational video, and a simplified comparison graphic provided in addition to the video, can reduce complexity and enhance individuals’ understanding of health plan trade-offs. The experiment involved real plan choices, with participants deciding between a high-deductible health plan that was generally more cost-effective and a traditional alternative. We find that the decision aids substantially improved individuals’ understanding of plan features and cost differences. However, these improvements led to only modest increases in HDHP enrollment. This suggests that decision aids can help clarify plan differences but may not fully overcome behavioral frictions such as inertia, liquidity concerns, or risk aversion. Preliminary results also point to heterogeneous responses across individuals, motivating ongoing work to identify key characteristics driving variation in treatment effects.
Optimal Health Insurance Design with Behavioral Hazard: When the First Dollar Matters
When deductibles and coinsurance apply, many people are myopic, focusing on what they must pay today and underweighting how current spending lowers future prices. I build a within‑year dynamic model that captures first‑dollar sensitivity and the risk that individuals cut back on important care. Using monthly claims from a large Wisconsin employer and and natural experiments in plan design, I estimate behavioral parameters governing myopic responses. Preliminary results show large reactions to small deductibles, including reductions in use among higher‑risk members, consistent with myopic behavior. Using the estimated model, I compare alternative plan designs and find sizable gains from making the first dollars of care inexpensive while applying moderate cost sharing at higher spending levels.