Moral Hazard and Adverse Selection in the Insurance Market

Willardsen presented on his upcoming article with the same title. The abstract from this paper is as follows: Understanding the relative significance of adverse selection and moral hazard is important in determining effective policy for insurance markets. Separate identification of these two effects, empirically, is difficult. To overcome this limitation, this paper uses experimental methods to examine how adverse selection and moral hazard separately affect agent performance in a real-effort task. In particular, we explore how agent behavior (effort in the task) changes across a baseline with no insurance option, a treatment where individuals can choose to purchase insurance, and a third treatment where individuals must purchase insurance. We find that our platform can be helpful in studying issues that may arise in different insurance settings (e.g., workers compensation insurance or unemployment insurance).https://corescholar.libraries.wright.edu/econ_econometrics/1001/thumbnail.jp

Moral Hazard and Adverse Selection in the Insurance Market

Willardsen presented on his upcoming article with the same title. The abstract from this paper is as follows: Understanding the relative significance of adverse selection and moral hazard is important in determining effective policy for insurance markets. Separate identification of these two effects, empirically, is difficult. To overcome this limitation, this paper uses experimental methods to examine how adverse selection and moral hazard separately affect agent performance in a real-effort task. In particular, we explore how agent behavior (effort in the task) changes across a baseline with no insurance option, a treatment where individuals can choose to purchase insurance, and a third treatment where individuals must purchase insurance. We find that our platform can be helpful in studying issues that may arise in different insurance settings (e.g., workers compensation insurance or unemployment insurance)

Local Public Services Costs and the Geography of Development: Evidence from Florida Counties

Theory suggests that the spatial distribution of development within a local jurisdiction affects the costs of providing local public services. We use GINI coefficients to characterize these distributions at the county level and estimate the effects on real per capita expenditures from reductions in the spatial concentration of all buildings and nine alternative types of development. We also estimate the effect on expenditures from expansions in the developed area of a county. The results obtained from a panel of Florida counties confirm our theory and suggest that the geography of development within a county affects public services costs

The Millage Rate Offset and Property Tax Revenue Stability

One of the alleged virtues of the property tax is that it produces stable revenues regardless of price movements in real estate markets. One explanation for this is that local governments adjust their millage rates to offset changes in their property tax base. Little evidence, however, exists on the strength of this millage rate offset mechanism. We hypothesize that the importance of this mechanism will vary among local governments depending upon the monopoly power that they possess. The results provide strong support for our hypothesis

The Millage Rate Offset and Property Tax Revenue Stability

One of the alleged virtues of the property tax is that it produces stable revenues regardless of price movements in real estate markets. One explanation for this is that local governments adjust their millage rates to offset changes in their property tax base. Little evidence, however, exists on the strength of this millage rate offset mechanism. We hypothesize that the importance of this mechanism will vary among local governments depending upon the monopoly power that they possess. The results provide strong support for our hypothesis

Effects of the BP Deepwater Horizon Oil Spill on Housing Markets

When the Deepwater Horizon oil rig exploded in 2010, it resulted in the largest off-shore oil spill in United States history. Economic theory dictates that the oil damage and restitution payments that resulted from the spill should be capitalized into property values. To measure the extent of this capitalization, we create a novel dataset by linking surveys of the location and severity of oil observed along over 4,300 miles of the Gulf Coast to measures of local housing market outcomes. We then perform hedonic-style analysis to determine the net effects of the spill on affected real estate markets. In doing so, we provide the first plausibly causal estimates of the effect of the spill on affected housing markets throughout the Gulf region. Identification comes from a triple-difference framework that exploits the random nature of both the spill and the spatial distribution of oil that affected coastal communities, as well as controls for the confounding effects of the housing market crash. Results suggest that on net, the BP oil spill caused a significant decline in home prices of between 4% and 8% that persisted until at least 2015. This implies housing markets capitalized $3.8 billion to$5.0 billion in spill damage inclusive of clean-up and restitution effects. These results are robust to numerous alternative definitions of treatment and control groups

Effects of the BP Deepwater Horizon Oil Spill on Housing Markets

When the Deepwater Horizon oil rig exploded in 2010, it resulted in the largest off-shore oil spill in United States history. Economic theory dictates that the oil damage and restitution payments that resulted from the spill should be capitalized into property values. To measure the extent of this capitalization, we create a novel dataset by linking surveys of the location and severity of oil observed along over 4,300 miles of the Gulf Coast to measures of local housing market outcomes. We then perform hedonic-style analysis to determine the net effects of the spill on affected real estate markets. In doing so, we provide the first plausibly causal estimates of the effect of the spill on affected housing markets throughout the Gulf region. Identification comes from a triple-difference framework that exploits the random nature of both the spill and the spatial distribution of oil that affected coastal communities, as well as controls for the confounding effects of the housing market crash. Results suggest that on net, the BP oil spill caused a significant decline in home prices of between 4% and 8% that persisted until at least 2015. This implies housing markets capitalized $3.8 billion to$5.0 billion in spill damage inclusive of clean-up and restitution effects. These results are robust to numerous alternative definitions of treatment and control groups

The Fiscal Impacts of Alternative Land Uses

Current knowledge of the fiscal impacts of alternative land uses comes largely from cost of community services (CCS) case studies, the results of which are viewed skeptically in the literature due to methodological concerns. To address these issues, we develop an econometric approach that allows us to capture both the direct and indirect relationships between a complete accounting of community fiscal measures and the full distribution of acres of land uses in a jurisdiction. Using a novel panel data set, we extensively document empirical correlations that have not yet been formally established in the literature. Our results are inconsistent with the broad conclusions of CCS studies: neither a shift from agricultural to residential land nor a shift to commercial land is associated with a significant change in the budget. We provide support for and insights into our results by extending our analysis to finer revenue/expenditure and land-use subcategorie