TY - JOUR
T1 - Identifying moral hazard in car insurance contracts
AU - Weisburd, Sarit
N1 - Publisher Copyright:
© 2015 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
PY - 2015/5/1
Y1 - 2015/5/1
N2 - This paper capitalizes on a unique situation in Israel where car insurance coverage is often distributed as a benefit by employers. In our sample, employer-determined coverage resulted in an average $235 discount in accident costs. Using instrumental variable analysis on data provided by an insurance firm in Israel (2001-2008), we find that each $100 reduction in accident costs results in a 1.7 percentage point increase in the probability of an accident. At an average accident rate of 16.3 percent, this 10 percent increase in auto accidents can be interpreted as the effect of moral hazard on car accidents.
AB - This paper capitalizes on a unique situation in Israel where car insurance coverage is often distributed as a benefit by employers. In our sample, employer-determined coverage resulted in an average $235 discount in accident costs. Using instrumental variable analysis on data provided by an insurance firm in Israel (2001-2008), we find that each $100 reduction in accident costs results in a 1.7 percentage point increase in the probability of an accident. At an average accident rate of 16.3 percent, this 10 percent increase in auto accidents can be interpreted as the effect of moral hazard on car accidents.
UR - http://www.scopus.com/inward/record.url?scp=84928529010&partnerID=8YFLogxK
U2 - 10.1162/REST_a_00448
DO - 10.1162/REST_a_00448
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AN - SCOPUS:84928529010
SN - 0034-6535
VL - 97
SP - 301
EP - 313
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 2
ER -
