Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245438 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9257
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper analyses the relationship between locus of control (LOC) and the demand for supplementary health insurance. Drawing on longitudinal data from Germany, we find robust evidence that individuals having an internal LOC are more likely to take up supplementary private health insurance (SUPP). The increase in the probability to have a SUPP due to one standard deviation increase in the measure of internal LOC is equivalent to an increase in household income by 14 percent. Second, we find that the positive association between self-reported health and SUPP becomes small and insignificant when we control for LOC, suggesting that LOC might be an unobserved individual trait that can explain advantageous selection into SUPP. Third, we find comparable results using data from Australia, which enhances the external validity of our results.
Subjects: 
private health insurance
health care use
risk aversion
locus of control
positive selection
supplementary insurance
Germany
Australia
JEL: 
I12
I13
I18
D15
Document Type: 
Working Paper
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