American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment
American Economic Review
vol. 106,
no. 12, December 2016
(pp. 3932–61)
Abstract
Consumers' enrollment decisions in Medicare Part D can be explained by Abaluck and Gruber's (2011) model of utility maximization with psychological biases or by a neoclassical version of their model that precludes such biases. We evaluate these competing hypotheses by applying nonparametric tests of utility maximization and model validation tests to administrative data. We find that 79 percent of enrollment decisions from 2006 to 2010 satisfied basic axioms of consumer theory under the assumption of full information. The validation tests provide evidence against widespread psychological biases. In particular, we find that precluding psychological biases improves the structural model's out-of-sample predictions for consumer behavior.Citation
Ketcham, Jonathan D., Nicolai V. Kuminoff, and Christopher A. Powers. 2016. "Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment." American Economic Review, 106 (12): 3932–61. DOI: 10.1257/aer.20131048Additional Materials
JEL Classification
- C52 Model Evaluation, Validation, and Selection
- D12 Consumer Economics: Empirical Analysis
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
- J14 Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination