A behavioral decomposition of willingness to pay for health insurance

Abstract Despite widespread exposure to substantial medical expenditure risk in low-income populations, health insurance enrollment is typically low. This puzzling from the perspective of expected utility theory. To help explain it, this paper introduces a decomposition stated willingness pay (WTP) for into its fair price and three behavioral deviations that due perception attitude consistent with prospect theory, plus residual. apply approach, we elicit WTP, subjective distributions expenditures (utility curvature probability weighting) Filipino households nationwide survey. We find mean WTP uninsured less than both actuarially subsidized at which public offered. not explained by downwardly biased beliefs: median expectation are greater price. Convex domain losses pushes below price, transformation probabilities decision weights depresses further, least using one two specific decompositions. reduced further factors other attitude.