@article {458171,
	title = {Measuring Ex-Ante Welfare in Insurance Markets},
	journal = {Review of Economic Studies},
	volume = {88},
	number = {3},
	year = {2020},
	month = {2020},
	pages = {1193{\textendash}1223},
	abstract = {
	



	
		
		
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			The willingness to pay for insurance captures the value of insurance against only the risk that remains when choices are observed. This paper develops tools to measure the ex-ante expected utility impact of insurance subsidies and mandates when choices are observed after some insurable information is revealed. The approach retains the transparency of using reduced-form willingness to pay and cost curves, but it adds one additional sufficient statistic: the difference in marginal utilities between insured and uninsured. I provide an approach to estimate this statistic that uses only reduced-form willingness to pay and cost curves, combined with either a measure of risk aversion. I compare the approach to structural approaches that require fully specifying the choice environment and information sets of individuals. I apply the approach using existing willingness to pay and cost curve estimates from the low-income health insurance exchange in Massachusetts. Ex-ante optimal insurance prices are roughly 30\% lower than prices that maximize market surplus. While mandates would increase deadweight loss, the results suggest they would actually increase ex-ante expected utility.
		

		
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},
	url = {https://academic.oup.com/restud/article/88/3/1193/5815570?guestAccessKey=96c47eb3-8c37-4114-81a7-30d02bafb65b},
	author = {Nathaniel Hendren}
}
