Political interests cause inefficiencies in insurance
Freakonomics Radio highlights research by UC professor
Research by a University of Cincinnati professor illustrates how insurance markets are broken, Massachusetts Institute of Technology economist Amy Finkelstein said during a Freakonomics Radio Book Club discussion.
Eunjee Kwon, PhD, an assistant professor in real estate at the University of Cincinnati's Carl H. Lindner College of Business, studied the unintended consequences of post-disaster policies and reported the findings in a paper she co-authored.
Eunjee Kwon, PhD, assistant professor in real estate at the University of Cincinnati's Carl H. Lindner College of Business
During election seasons, areas that are affected by natural disasters such as hurricanes receive extra government funding because politicians want to show they're helping people, the research found. That extra funding attracts more people to those rebuilding regions, which puts more people in potentially hazardous areas.
“The paper highlights that the distorted movement of people result in GDP (gross domestic product) and productivity losses,” Kwon said. “Moreover, the politically-driven aid could potentially dissuade people from purchasing insurance coverage since they expect the government to provide assistance following disasters.”
Finkelstein is the co-author of a new book called “Risky Business: Why Insurance Markets Fail and What to Do About It.” Referencing the work of Kwon and her colleagues, Finkelstein said the same issues occur in health care with policies and regulations that dissuade people from purchasing better health insurance.
“We all know that many policies are influenced by political interests, but we don't yet know how much inefficiency these electoral motives have caused,” Kwon said. “Our work challenges the structure of public policies that have strong political connections.”
Featured image at top: Hurricane Irma aftermath. Photo by Wade Austin Ellis on Unsplash
Innovation Lives Here
The University of Cincinnati is leading public urban universities into a new era of innovation and impact. Our faculty, staff and students are saving lives, changing outcomes and bending the future in our city's direction. Next Lives Here.
Related Stories
Political interests cause inefficiencies in insurance
March 31, 2023
Research by a University of Cincinnati professor illustrates how insurance markets are broken, Massachusetts Institute of Technology economist Amy Finkelstein said during a Freakonomics Radio Book Club discussion.
Cincinnati Business Courier: Gary Painter named academic director of real estate program
June 1, 2023
Gary Painter, PhD, is joining the Carl H. Lindner College of Business as the real estate program’s new academic director.
Weekly Real Estate News: UC welcomes new academic director of real estate program
June 8, 2023
Gary Painter, PhD, the new academic director of the real estate program within the University of Cincinnati’s Carl H. Lindner College of Business, is looking forward to making connections in the university community and beyond, he told Weekly Real Estate News.