The Importance of Choice in Insurance Markets

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U.S. problematic relative to how other high income countries have tried to deal with this yeah that's a topic for other podcasts but an extremely believable claim given our empirical information. One of the messages of our book which may make it you know not a popular sound bite on late night tv but is an important message is there these there aren't facile solutions There really are trade-offs take even the case of mandates that we've talked about already and think about perfect enforcement of the mandate so we don't have to deal with that issue.

If you knew exactly when every person was going to die, or require medical care, you could make a killing buying and selling insurance. Nobody knows these things, of course -- the future is hard to predict -- but some people know something about the future that other people don't. This sets up adverse selection: the ability of one party to leverage information another party doesn't have, in order to gain an economic advantage. Economist Amy Finkelstein is an expert in this phenomenon, as well as the usefulness of empirical studies in economic research.

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Amy Finkelstein received her Ph.D. in economics from the Massachusetts Institute of Technology. She is currently John & Jennie S. MacDonald Professor of Economics at MIT. She is the co-director and research associate of the Public Economics Program at the National Bureau of Economic Research, and the co-Scientific Director of J-PAL North America. Among her awards are a MacArthur Fellowship and the John Bates Clark Medal. Her recent book, with co-authors Liran Einav and Ray Fisman, is Risky Business: Why Insurance Markets Fail and What to Do About It.

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