Podcast
Freakonomics Radio
The book is about a problem with insurance markets called 'adverse selection' where the insurance market is dominated by those most likely to need it. The author suggests solutions, such as mandates, to address this problem.
Finkelstein cites a famous paper by the economist George Akerlof called The Market for Lemons, Quality Uncertainty and the Market Mechanism.
— Episode: 537. “Insurance Is Sexy.” Discuss.
Episode: 537. “Insurance Is Sexy.” Discuss.
The book is about a problem with insurance markets called 'adverse selection' where the insurance market is dominated by those most likely to need it. The author suggests solutions, such as mandates, to address this problem.
Finkelstein cites a famous paper by the economist George Akerlof called The Market for Lemons, Quality Uncertainty and the Market Mechanism.
It is this sort of reasoning that led most economists, including ourselves, to the intuition that mandates are the best and most straightforward solution to selection problems.
Mandates do work the way economists like George Akerlof, who wrote about this in his Nobel Prize-winning work, The Market for Lemons, predicts.