Ontology highlight
ABSTRACT:
SUBMITTER: Einav L
PROVIDER: S-EPMC4945120 | biostudies-other | 2016 Apr
REPOSITORIES: biostudies-other
Einav Liran L Finkelstein Amy A Kluender Raymond R Schrimpf Paul P
American economic journal. Applied economics 20160401 2
"Big data" and statistical techniques to score potential transactions have transformed insurance and credit markets. In this paper, we observe that these widely-used statistical scores summarize a much richer heterogeneity, and may be endogenous to the context in which they get applied. We demonstrate this point empirically using data from Medicare Part D, showing that risk scores confound underlying health and endogenous spending response to insurance. We then illustrate theoretically that when ...[more]