TY - JOUR
T1 - The economics of moral hazard revisited
AU - Nyman, John A
PY - 1999/12/1
Y1 - 1999/12/1
N2 - Pauly's (1968) [Pauly, M., 1968. The economics of moral hazard, Comment, American Economic Review 58, 531-537.] analysis of the welfare loss from insurance assumes that medical care consumption is not determined by income, but recent studies suggest it is. This study argues that (1) Pauly's analysis overstates the welfare loss because it includes the effect of income on consumption, (2) the relevant income effect is derived from income transfers from the healthy to the ill that occur when the probability of illness is less than 1, and (3) the welfare loss can be considered the transaction cost of insurance. Copyright (C) 1999 Elsevier Science B.V.
AB - Pauly's (1968) [Pauly, M., 1968. The economics of moral hazard, Comment, American Economic Review 58, 531-537.] analysis of the welfare loss from insurance assumes that medical care consumption is not determined by income, but recent studies suggest it is. This study argues that (1) Pauly's analysis overstates the welfare loss because it includes the effect of income on consumption, (2) the relevant income effect is derived from income transfers from the healthy to the ill that occur when the probability of illness is less than 1, and (3) the welfare loss can be considered the transaction cost of insurance. Copyright (C) 1999 Elsevier Science B.V.
KW - Health insurance
KW - Moral hazard
KW - Welfare loss
UR - http://www.scopus.com/inward/record.url?scp=0032748936&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0032748936&partnerID=8YFLogxK
U2 - 10.1016/S0167-6296(99)00015-6
DO - 10.1016/S0167-6296(99)00015-6
M3 - Article
C2 - 10847936
AN - SCOPUS:0032748936
SN - 0167-6296
VL - 18
SP - 811
EP - 824
JO - Journal of Health Economics
JF - Journal of Health Economics
IS - 6
ER -
