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Buying Control? 'Locus of Control' and the Uptake of Supplementary Health Insurance

Author

Listed:
  • Bonsang, Eric

    (Université Paris-Dauphine)

  • Costa-Font, Joan

    (London School of Economics)

  • de New, Sonja C.

    (Monash University)

Abstract
This paper analyses the relationship between locus of control (LOC) and the demand for supplementary health insurance. Drawing on longitudinal data from Germany, we find robust evidence that individuals having an internal LOC are more likely to take up supplementary private health insurance (SUPP). The increase in the probability to have a SUPP due to one standard deviation increase in the measure of internal LOC is equivalent to an increase in household income by 14 percent. Second, we find that the positive association between selfreported health and SUPP becomes small and insignificant when we control for LOC, suggesting that LOC might be an unobserved individual trait that can explain advantageous selection into SUPP. Third, we find comparable results using data from Australia, which enhances the external validity of our results.

Suggested Citation

  • Bonsang, Eric & Costa-Font, Joan & de New, Sonja C., 2021. "Buying Control? 'Locus of Control' and the Uptake of Supplementary Health Insurance," IZA Discussion Papers 14633, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14633
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    References listed on IDEAS

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    3. Budría, Santiago & Betancourt-Odio, Alejandro & Wirth, Eszter, 2023. "Does Internal Locus of Control Get You Out of Homelessness?," IZA Discussion Papers 16242, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Germany; supplementary insurance; private health insurance; risk aversion; health care use; locus of control; positive selection; Australia;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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