Price Elasticity of Demand for Term Life Insurance and Adverse Selection

Mark V. Pauly, Kate H. Withers, Krupa Subramanian-Viswana, Jean Lemaire and John C. Hershey
Authors registered in the RePEc Author Service: Krupa S. Viswanathan

No 9925, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides an empirical estimate of price' and risk' elasticities of demand for term life insurance for those who purchase some insurance. It finds that the elasticity with respect to changes in premiums is generally higher than the elasticity with respect to changes in risk. It also finds that the elasticity, in the range of -0.3 to -0.5, is sufficiently low that adverse selection in term life insurance is unlikely to lead to a death spiral and may not even lead to measured effects of adverse selection on total purchases.

JEL-codes: D1 D8 (search for similar items in EconPapers)
Date: 2003-08
New Economics Papers: this item is included in nep-com and nep-hea
Note: EH
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Citations: View citations in EconPapers (31)

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