Choice Inconsistencies among the Elderly: Evidence from Plan Choice in the Medicare Part D Program: Comment.

Am Econ Rev

US Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of Enterprise Data and Analytics, Baltimore, MD.

Published: December 2016

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.

Download full-text PDF

Source
http://dx.doi.org/10.1257/aer.20131048DOI Listing

Publication Analysis

Top Keywords

psychological biases
12
enrollment decisions
8
utility maximization
8
validation tests
8
choice inconsistencies
4
inconsistencies elderly
4
elderly evidence
4
evidence plan
4
plan choice
4
choice medicare
4

Similar Publications

Want AI Summaries of new PubMed Abstracts delivered to your In-box?

Enter search terms and have AI summaries delivered each week - change queries or unsubscribe any time!