Information asymmetry: party with more information wins in a transaction . Information asymmetry cause adverse selection. Government solution in insurance market : • Subsidization : Pay healthy people in benefit of taxes to take up health insurances , this is expensive. • Make insurance mandatory , this will piss of healthy people Eg. employer has to give pay for their insurance to employees. • Provide , this is super expensive. When you insure people for risk this creates moral hazard , fayda uthayega insurance ka.
When speaking on the marginal value of leisure, is there also an opposite value in which people seem satisfaction in participation and productivity/creativity?
no, at least in standard economic modeling; work is a bad thing for every rational decision-maker, and you don’t model functions for the bad things, you have to model functions for the good things which is leisure in this case, and take the difference of total and good thing which will give you the bad thing
Perhaps he meant France at 62yrs? There is no European country with a pension at 55, and the Netherlands doesn't give 90% of one's wage but rather 70% of _minimum_ wage (plus some other programmes)
Yes, this part about Netherlands is incredibly wrong, also e.g. in Poland if you work after the minimum retiring age your pension is going up. But the whole course is free and obviously great :)
Look for Public Finance and Public Policy courses here on YT. You might not find as good as a teacher as Gruber, but it's free. You can find Gruber's notes on MIT open courseware
Bot Summary: In Professor Jonathan Gruber's lecture at MIT on "Market Failures II: Informational Asymmetry," he delves into the complexities of social insurance and its necessity due to certain market failures, specifically focusing on informational asymmetry. Gruber begins by explaining the rationale behind government-provided insurance programs, which are major components of government spending in the United States. He defines social insurance as government efforts to mitigate risks associated with health, employment, and other uncertainties through programs funded by taxpayers. The lecture transitions into a discussion of information asymmetry, where one party in a transaction has more or better information than the other. This asymmetry can lead to adverse selection, a scenario where only those who expect to benefit from insurance (like those who are likely to require significant medical care) would opt into insurance, thereby driving up costs for insurers and potentially leading to market collapse. Gruber uses George Akerlof's "lemons problem" as an analogy, explaining how the used car market can fail when sellers have more information about the car's quality than buyers. Expanding on this, Gruber explores the implications of information asymmetry in insurance markets. He discusses how private insurance markets can fail due to adverse selection, prompting government intervention. Government policies such as mandates (requiring everyone to purchase insurance) and subsidies (to encourage participation and help cover costs) are introduced as solutions to these market failures. A significant part of the lecture is dedicated to discussing moral hazard, a situation where the behavior of insured individuals changes because they no longer bear the full cost of their actions. Gruber explains that social insurance, while beneficial in protecting individuals from financial devastation due to unpredictable events, also incentivizes less cautious behavior which can increase overall costs. Gruber then specifically addresses the U.S. Social Security program, explaining its role as a form of social insurance that provides income to the elderly post-retirement, thus preventing poverty among the aged population. He discusses the funding mechanism of Social Security, the benefits it provides, and the challenges it faces with demographic changes such as increased life expectancy. Throughout the lecture, Gruber emphasizes the trade-offs involved in government interventions in insurance markets. While such interventions can prevent market collapse and provide security against life’s uncertainties, they also have potential downsides like reducing incentives for maintaining employment or increasing costs due to higher risk behaviors. He concludes by stressing the importance of carefully considering these trade-offs when designing social insurance policies, aiming for a balance that minimizes negative impacts while maximizing social welfare.
Stopping at 18:00 there is so much more too It though. Government, inflation, crappy food choices, etc. if none of that existed it would be no different than any other free market like a lawn service company. If we have an epidemic of obesity from people making poor food choices causing the health issue, then maybe the attention needs to focus there so the costs across the board aren’t as high and many more would be insured. If a car insurance company sees you suck at driving then they don’t insure you due to your risk to the company. Why should a health insurance company be any different? Then you have moral hazard. You also have inflation making everything else more expensive relative to wages which government really creates along with the banking system. I don’t think you can fix that health care crisis without incentives to eat better and the government getting a life and getting out of the way.
But maybe if there weren't (as much) unemployment insurance people would be incetivised to save more? (Not that I think its a good idea to ditch Unemployment Insurance but just putting this thought out there)
@@TejasM14 I'm Canadian. I had to wait a year and a half for a simple colonoscopy. I could have paid out of pocket in Montana and gotten service within two weeks, and less than what our government unionized monopoly charges the taxpayer. For someone, like myself, who believes early detection will keep you dying from Cancer... I want options, not glorious government monopolies. Thanks.
@@TejasM14 I lost my father, aunt, and two friends waiting, across 3 different provinces. I'm curious, why do I have to 'believe' you? Is this a new form of government worship? Stop selling your faith in systems predicated on debt and monopolistic controls. Thanks.
Dutch retirement age is actually 65.25, and for the so-called AOW the amount you get is 70% of _minimum_ wage, so about €15k (≈$16k). (There are additional pension programs, so the actual income for pensioners is usually higher.) The lowest retirement ages are found in Eastern Europe, and of Western Europe France is the lowest (though set to rise).
Corona season has taught us a lot of this in the real world! 😬
Information asymmetry: party with more information wins in a transaction .
Information asymmetry cause adverse selection.
Government solution in insurance market :
• Subsidization : Pay healthy people in benefit of taxes to take up health insurances , this is expensive.
• Make insurance mandatory , this will piss of healthy people Eg. employer has to give pay for their insurance to employees.
• Provide , this is super expensive.
When you insure people for risk this creates moral hazard , fayda uthayega insurance ka.
"In Europe they don't have that" is a gross generalization :I
There's countries here that have very similar systems as the US one.
When speaking on the marginal value of leisure, is there also an opposite value in which people seem satisfaction in participation and productivity/creativity?
no, at least in standard economic modeling; work is a bad thing for every rational decision-maker, and you don’t model functions for the bad things, you have to model functions for the good things which is leisure in this case, and take the difference of total and good thing which will give you the bad thing
Perhaps he meant France at 62yrs? There is no European country with a pension at 55, and the Netherlands doesn't give 90% of one's wage but rather 70% of _minimum_ wage (plus some other programmes)
Yes, this part about Netherlands is incredibly wrong, also e.g. in Poland if you work after the minimum retiring age your pension is going up. But the whole course is free and obviously great :)
I'm Dutch, and it would have been great if it would have been 90%, but it definitely isn't... 🤔
I like the 23 and me question
HOPE THERE IS COURE 14.41 UPLOADED
Look for Public Finance and Public Policy courses here on YT. You might not find as good as a teacher as Gruber, but it's free. You can find Gruber's notes on MIT open courseware
Bot Summary:
In Professor Jonathan Gruber's lecture at MIT on "Market Failures II: Informational Asymmetry," he delves into the complexities of social insurance and its necessity due to certain market failures, specifically focusing on informational asymmetry. Gruber begins by explaining the rationale behind government-provided insurance programs, which are major components of government spending in the United States. He defines social insurance as government efforts to mitigate risks associated with health, employment, and other uncertainties through programs funded by taxpayers.
The lecture transitions into a discussion of information asymmetry, where one party in a transaction has more or better information than the other. This asymmetry can lead to adverse selection, a scenario where only those who expect to benefit from insurance (like those who are likely to require significant medical care) would opt into insurance, thereby driving up costs for insurers and potentially leading to market collapse. Gruber uses George Akerlof's "lemons problem" as an analogy, explaining how the used car market can fail when sellers have more information about the car's quality than buyers.
Expanding on this, Gruber explores the implications of information asymmetry in insurance markets. He discusses how private insurance markets can fail due to adverse selection, prompting government intervention. Government policies such as mandates (requiring everyone to purchase insurance) and subsidies (to encourage participation and help cover costs) are introduced as solutions to these market failures.
A significant part of the lecture is dedicated to discussing moral hazard, a situation where the behavior of insured individuals changes because they no longer bear the full cost of their actions. Gruber explains that social insurance, while beneficial in protecting individuals from financial devastation due to unpredictable events, also incentivizes less cautious behavior which can increase overall costs.
Gruber then specifically addresses the U.S. Social Security program, explaining its role as a form of social insurance that provides income to the elderly post-retirement, thus preventing poverty among the aged population. He discusses the funding mechanism of Social Security, the benefits it provides, and the challenges it faces with demographic changes such as increased life expectancy.
Throughout the lecture, Gruber emphasizes the trade-offs involved in government interventions in insurance markets. While such interventions can prevent market collapse and provide security against life’s uncertainties, they also have potential downsides like reducing incentives for maintaining employment or increasing costs due to higher risk behaviors. He concludes by stressing the importance of carefully considering these trade-offs when designing social insurance policies, aiming for a balance that minimizes negative impacts while maximizing social welfare.
Stopping at 18:00 there is so much more too It though. Government, inflation, crappy food choices, etc. if none of that existed it would be no different than any other free market like a lawn service company. If we have an epidemic of obesity from people making poor food choices causing the health issue, then maybe the attention needs to focus there so the costs across the board aren’t as high and many more would be insured. If a car insurance company sees you suck at driving then they don’t insure you due to your risk to the company. Why should a health insurance company be any different? Then you have moral hazard. You also have inflation making everything else more expensive relative to wages which government really creates along with the banking system. I don’t think you can fix that health care crisis without incentives to eat better and the government getting a life and getting out of the way.
But maybe if there weren't (as much) unemployment insurance people would be incetivised to save more?
(Not that I think its a good idea to ditch Unemployment Insurance but just putting this thought out there)
Thanks for the video
10
Is there any real economics classes out there from Thomas Sowell? The market does not fail, government fails the market.
clever
@@TejasM14 I'm Canadian. I had to wait a year and a half for a simple colonoscopy. I could have paid out of pocket in Montana and gotten service within two weeks, and less than what our government unionized monopoly charges the taxpayer. For someone, like myself, who believes early detection will keep you dying from Cancer... I want options, not glorious government monopolies. Thanks.
@@TejasM14 I lost my father, aunt, and two friends waiting, across 3 different provinces.
I'm curious, why do I have to 'believe' you? Is this a new form of government worship? Stop selling your faith in systems predicated on debt and monopolistic controls. Thanks.
theres a reason why this occurs mainly in free, unregulated markets....revise your econ.
Not really. He was not a serious economist and has not contributed to the field at all.
Hey Siri, how do I become a Netherlands citizen?
Dutch retirement age is actually 65.25, and for the so-called AOW the amount you get is 70% of _minimum_ wage, so about €15k (≈$16k). (There are additional pension programs, so the actual income for pensioners is usually higher.)
The lowest retirement ages are found in Eastern Europe, and of Western Europe France is the lowest (though set to rise).
A lot of mistakes in this lecture and somehow all of the mistakes magically benefit multinational corporations.