The Value of Choice in Insurance Purchasing Decisions

University Of Pennsylvania, Philadelphia PA

Investigators

Abstract

DESCRIPTION (provided by the applicant): uman This is a study that analyzes whether, how much, and why individuals value choice when purchasing health insurance by analyzing existing health care data and implementing experimental techniques to collect original data. This study will test individuals' revealed preferences as found through their health plan choices in the Community Tracking Study Household and Employer Surveys data, as well as by eliciting expressed preferences through the use of our experimental techniques which are able to see whether individuals express a higher value for an outcome when it was a result of a choice compared to when it was the only option. The first aim of this project is to see whether having choice increases the value that individuals place on the chosen good. The purpose is to differentiate between access to a preferred alternative and higher valuation caused by the act of choice. The second aim of this project is to try and determine why individuals value choice in health insurance purchasing. The candidate hypothesizes that individuals' valuations of the chosen good may increase when the decision is presented as a choice. A third aim of this project is to determine if having more choices of health insurance plans causes individuals to be more likely to enroll in health insurance. The hope is that, by considering choice from an interdisciplinary perspective and that by looking at real public policy implications of choice, this work will have three contributions: (1) to help understand individuals' preferences for choice in the number of health plans offered; (2) to help understand the relationship between the number of choices offered and employee take-up of health insurance, potentially shedding some light on the uninsurance problem; and (3) to test a hypothesis that is original in the decision science literature-that when offered the ability to choose a product, individuals will value this same product more than when no choice is available.