Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245684 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14633
Publisher: 
Institute of Labor Economics (IZA), Bonn
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 selfreported 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: 
positive selection
locus of control
risk aversion
health care use
private health insurance
supplementary insurance
Germany
Australia
JEL: 
I18
D15
Document Type: 
Working Paper

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