The probationary period as a screening device: competitive markets

Seminal papers about asymmetry of information in a competitive insurance market, and the monetary deductible as a screening device show that any existing equilibrium is of a separating type. High risks buy complete insurance whilst low risks buy partial insurance. Rothschild and Stiglitz (1976) deal with insurance companies showing Nash behaviour, while Miyazaki (1977) and Spence (1978) consider firms with Wilson foresight. In this paper, we analyze the strength of the probationary period as a screening device. We show that in such a case a) under Nash behavior, low risks may prefer not to purchase any insurance at all in equilibrium and b)under Wilson foresight, a pooling equilibrium may exist

Quantum measurement of the degree of polarization of a light beam

We demonstrate a coherent quantum measurement for the determination of the degree of polarization (DOP). This method allows to measure the DOP in the presence of fast polarization state fluctuations, difficult to achieve with the typically used polarimetric technique. A good precision of the DOP measurements is obtained using 8 type II nonlinear crystals assembled for spatial walk-off compensation.Comment: 4 pages, 3 figure

In sickness and in Health? Dynamics of health and cohabitation in the United Kingdom

The purpose of this paper is to analyse the dynamics of cohabitation and functional impairments among older people. Our research has three main aims. Firstly, we want to analyse the effects of cohabitation on disability. Secondly, we want to study time trends in disability and cohabitation jointly to explore relationships between the two. Thirdly, we examine socioeconomic differences -- as captured by educational attainment -- in disability. These issues are of great interest from several points of view. Firstly, they address an emerging theoretical debate concerning the effects of cohabitation on health and contribute to a sparse empirical literature on the topic. Secondly, our findings are highly policy relevant. Concerning long-term care for older people, for example, cohabitation is of double importance: firstly, since people who cohabit tend to be healthier, and secondly, since a partner is the typical provider of informal care. In a time where family structures among the old are likely to change (due to changes in life expectancy and divorce rates), our research will be useful for planning purposes. Finally, the model can be used to simulate populations of certain characteristics. Hence, it can be used to derive insurance premiums in order to reduce the problem of selection effects in the market for long-term care insurance. Using the British Household Panel Survey dataset, we apply panel data and simulation techniques to exploit the longitudinal characteristic of the panel. We estimate the two dependent variables -- cohabitation status and disability -- jointly, and allow for time trends, age effects and unobserved heterogeneity. We find that there are systematic differences between single and cohabiting people so that a cross sectional analysis would overestimate the causal relationship; nevertheless, cohabitation has a strong and positive effect on health. Furthermore, we find that bereavement of a partner has a significant negative impact on health

Are the dimensions of private information more multiple than expected? Information asymmetries in the market of supplementary private health insurance in England

Our study reexamines standard econometric approaches for the detection of information asymmetries on insurance markets. We claim that evidence based on a standard framework with 2 equations, which uses potential sources of information asymmetries, should stress the importance of heterogeneity in the parameters. We argue that conclusions derived from this methodology can be misleading if the estimated coefficients in such an `unused characteristics' framework are driven by different parts of the population. We show formally that an individual's expected risk from the perspective of insurance, conditioned on certain characteristics (which are not used for calculating the risk premium), can equal the population's expectation in risk { although such characteristics are both related to risk and insurance probability, which is usually interpreted as an indicator of information asymmetries. We provide empirical evidence on the existence of information asymmetries in the market for supplementary private health insurance in the UK. Overall, we found evidence for advantageous selection into the private risk pool; ie people with lower health risk tend to insure more. The main drivers of this phenomenon seem to be characteristics such as income and wealth. Nevertheless, we also found parameter heterogeneity to be relevant, leading to possible misinterpretation if the standard `unused characteristics' approach is applied

Investigating the market potential for customised long term care insurance products

Previous economic research into long-term care (LTC) has mainly been focussed on one issue: the reasons why the LTC insurance market has not been successful. In this contribution, we analyse the prospects for a new type of insurance policy, which offers a top-up on the resources already available to the individual. We abstract from most problems inherent in LTC insurance markets and derive premium rates for various types of insurance policies. Generally, we find that the top-up option reduces premium rates considerably, to the point where it might be expected that a substantial number of people would take up policies, were they available

Comparative Analysis of Long-Term Care Systems in Four Countries

This paper deals with long-term care (LTC) systems in four developed countries -- Germany, Japan, Sweden, and the U.S.A. -- from an economic point of view. Since these countries have differing traditions in welfare policy, the role of the state in financing and providing LTC services differs considerably. This paper focuses on these differences and their practical consequences. Firstly, a theoretical survey is undertaken to see under what circumstances and to what degree state intervention can be justified in order to increase economic efficiency. Secondly, the LTC systems of the four countries are analyzed qualitatively in the light of economic theory. Thirdly, the systems are compared quantitatively, with the main focus on their distributional impact. Furthermore, the issue of how state intervention alters the potential benefit from buying a private LTC insurance is analyzed, as well as how the internal rate of return from a pay-as-you-go (PAYG) systems changes over time in one of the countries (Sweden). The main conclusions are as follows: -- The design of LTC systems in the countries studied mainly follows social welfare traditions as developed in other sectors; the only exception being Japan, where a much more extensive role of the state in financing LTC has evolved over the last ten years compared to the rather modest role of the state in the Japanese economy in general. -- The differences in design of LTC systems have substantial distributional implications. All systems are progressive and favorable to women, but there is a wide range between the countries. -- In Sweden, the internal rate of return from a PAYG system is constantly decreasing with each cohort, but still positive for all cohorts born before 1990. The steady decline of the returns indicates that it will turn negative for later cohorts

Six Peaks Visible in the Redshift Distribution of 46,400 SDSS Quasars Agree with the Preferred Redshifts Predicted by the Decreasing Intrinsic Redshift Model

The redshift distribution of all 46,400 quasars in the Sloan Digital Sky Survey (SDSS) Quasar Catalog III, Third Data Release, is examined. Six Peaks that fall within the redshift window below z = 4, are visible. Their positions agree with the preferred redshift values predicted by the decreasing intrinsic redshift (DIR) model, even though this model was derived using completely independent evidence. A power spectrum analysis of the full dataset confirms the presence of a single, significant power peak at the expected redshift period. Power peaks with the predicted period are also obtained when the upper and lower halves of the redshift distribution are examined separately. The periodicity detected is in linear z, as opposed to log(1+z). Because the peaks in the SDSS quasar redshift distribution agree well with the preferred redshifts predicted by the intrinsic redshift relation, we conclude that this relation, and the peaks in the redshift distribution, likely both have the same origin, and this may be intrinsic redshifts, or a common selection effect. However, because of the way the intrinsic redshift relation was determined it seems unlikely that one selection effect could have been responsible for both.Comment: 12 pages, 12 figure, accepted for publication in the Astrophysical Journa