More on insurance as a Giffen good

✍ Scribed by Eric Briys; Georges Dionne; Louis Eeckhoudt

• Book ID: 104738170
• Publisher: Springer
• Year: 1989
• Tongue: English
• Weight: 222 KB
• Volume: 2
• Category: Article
• ISSN: 0895-5646
• DOI: 10.1007/bf00356865

✦ Synopsis

In this article, we generalize the Hoy and Robson (1981) analysis and provide a necessary and sufficient condition for insurance not to be a Giffen good. The condition gives a bound for the variation of absolute risk aversion that permits the wealth effect to be always dominated by the substitution effect.

In a well-known article, Mossin (1968) noted that insurance is an inferior good under decreasing absolute risk aversion. This contribution has generated some further investigations on the nature of the insurance activity (see, for example,