Replication data for: (Over)insuring Modest Risks

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Project Citation:

Sydnor, Justin. Replication data for: (Over)insuring Modest Risks. Nashville, TN: American Economic Association [publisher], 2010. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116373V1

Project Description

Summary: Despite the large literature on anomalies in risky choice, very little research has explored the relevance of these insights in real insurance markets. This paper uses new data on consumers' choices of deductibles for home insurance to provide evidence that a surprising level of risk aversion over modest stakes is a reality in the market. Most customers purchase low deductibles despite costs significantly above the expected value. Fitting these choices to a standard model of risk aversion yields implausibly large measures of risk parameters. Potential explanations and the implications of these results for understanding the market for insurance are discussed. (JEL D14, D81, G21, G22)

Scope of Project

JEL Classification:
      D14 Household Saving; Personal Finance
      D81 Criteria for Decision-Making under Risk and Uncertainty
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      G22 Insurance; Insurance Companies; Actuarial Studies

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V1 [2019-12-07]

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