Political interests cause inefficiencies in insurance
Freakonomics Radio highlights research by UC professor
Research by a University of Cincinnati professor illustrates how insurance markets are broken, Massachusetts Institute of Technology economist Amy Finkelstein said during a Freakonomics Radio Book Club discussion.
Eunjee Kwon, PhD, an assistant professor in real estate at the University of Cincinnati's Carl H. Lindner College of Business, studied the unintended consequences of post-disaster policies and reported the findings in a paper she co-authored.
Eunjee Kwon, PhD, assistant professor in real estate at the University of Cincinnati's Carl H. Lindner College of Business
During election seasons, areas that are affected by natural disasters such as hurricanes receive extra government funding because politicians want to show they're helping people, the research found. That extra funding attracts more people to those rebuilding regions, which puts more people in potentially hazardous areas.
“The paper highlights that the distorted movement of people result in GDP (gross domestic product) and productivity losses,” Kwon said. “Moreover, the politically-driven aid could potentially dissuade people from purchasing insurance coverage since they expect the government to provide assistance following disasters.”
Finkelstein is the co-author of a new book called “Risky Business: Why Insurance Markets Fail and What to Do About It.” Referencing the work of Kwon and her colleagues, Finkelstein said the same issues occur in health care with policies and regulations that dissuade people from purchasing better health insurance.
“We all know that many policies are influenced by political interests, but we don't yet know how much inefficiency these electoral motives have caused,” Kwon said. “Our work challenges the structure of public policies that have strong political connections.”
Featured image at top: Hurricane Irma aftermath. Photo by Wade Austin Ellis on Unsplash
Innovation Lives Here
The University of Cincinnati is leading public urban universities into a new era of innovation and impact. Our faculty, staff and students are saving lives, changing outcomes and bending the future in our city's direction. Next Lives Here.
Related Stories
Lindner graduate students shine in international simulation competition
November 10, 2025
Five master’s of information systems (MS IS) students took home fifth place out of 23 universities at the International ERPsim Competition hosted by HEC Montreal during the recent spring semester. The competition tests students’ knowledge of enterprise resource planning (ERP) software and their ability to adapt to challenging business problems.
Sugar overload killing hearts
November 10, 2025
Two in five people will be told they have diabetes during their lifetime. And people who have diabetes are twice as likely to develop heart disease. One of the deadliest dangers? Diabetic cardiomyopathy. But groundbreaking University of Cincinnati research hopes to stop and even reverse the damage before it’s too late.
Is going nuclear the solution to Ohio’s energy costs?
November 10, 2025
The Ohio Capital Journal recently reported that as energy prices continue to climb, economists are weighing the benefits of going nuclear to curb costs. The publication dove into a Scioto Analysis survey of 18 economists to weigh the pros and cons of nuclear energy. One economist featured was Iryna Topolyan, PhD, professor of economics at the Carl H. Lindner College of Business.