Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis

Patrick Bajari, Han Hong and Ahmed Khwaja

No 12445, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Theoretical models predict asymmetric information in health insurance markets may generate inefficient outcomes due to adverse selection and moral hazard. However, previous empirical research has found it difficult to disentangle adverse selection from moral hazard in health care. We empirically study this question by using data from the Health and Retirement Study to estimate a structural model of the demand for health insurance and medical care. Using a two-step semi-parametric estimation strategy we find significant evidence of moral hazard, but not of adverse selection.

JEL-codes: C14 D82 I11 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-fmk, nep-hea and nep-ias
Note: IO EH PE
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Citations: View citations in EconPapers (36)

Published as Patrick Bajari & Christina Dalton & Han Hong & Ahmed Khwaja, 2014. "Moral hazard, adverse selection, and health expenditures: A semiparametric analysis," The RAND Journal of Economics, vol 45(4), pages 747-763.

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