Negative Discount Rates for Health Insurance

Abstract

This paper measures the discount rate of health insurance by surveying. a sample of nearly 1,000 Washington and Lee alumni. We calculated the discount rate from a series of open-ended survey questions, eliminating some of the bias introduced in past studies that presented respondents with a series of pre-calculated options. Results showed that a large majority (81 % ) of individuals had negative discount rates for health insurance, meaning they prefer insurance in the future as opposed to the present. The study also indicates that people with negative discount rates behave differently with respect to time horizon than people with positive discount rates. These results suggest that a demand-side policy approach to increasing the number of people insured will be relatively ineffective.