![Hurricane Irma aftermath.](https://www.uc.edu/news/articles/2023/03/n21160142/jcr:content/image.img.cq5dam.thumbnail.500.500.jpg/1680279164803.jpg)
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
Prestigious green and gold accolades highlight UC Earth Day 2021
April 19, 2021
There’s no making light of the ‘Gold’ accolade recently earned by the University of Cincinnati’s Carl H. Lindner College of Business’ new home on campus.
UC’s summer semester offers students short sessions, flexibility
April 12, 2021
Coming into the summertime of 2020, Sumedha Kappagantula was considering ways to make the most her opportunities during what is usually a break from the academic rigor of her traditional school year. As a Biomedical Engineering major in the UC’s College of Engineering and Applied Sciences, Kappagantula is minoring in Chemistry and Biological Sciences, taking classes through the College of Arts and Sciences. She thought summer semester would be a great time to get ahead in her coursework, and move her degree forward.
UC garners sustainable, green campus success
April 19, 2021
University of Cincinnati Gold LEED certifications, student-involved energy-efficient programs and climate-friendly green technologies elevate UC to a national award-winning sustainable campus.
Futuristic cars may soon take flight
April 28, 2021
The Cincinnati Innovation District and University of Cincinnati team up with partners in 1819 Innovation Hub DriveOhio, Cincinnati Bell and Microsoft to innovate with UC talent and help bring future innovation within reach in FlyOhio student challenge.
'To make him proud was high on her list'
April 1, 2021
Alex Lewis lost her 82-year-old grandfather to Covid-19 just five weeks before her dream school showed up on the front steps of Roger Bacon High School to tell the senior that she has been admitted to the University of Cincinnati College of Nursing as part of a touching Decision Day surprise effort this year.
President picks exceptional talent
April 28, 2021
The University of Cincinnati 2021 Presidential Leadership Medal of Excellence Awards honor six undergraduate scholars for scholarship, leadership, character, service and the ideals of the university. Awardees are spotlighted for exceptional academics, creativity, community service and innovation.
Arts & Sciences graduate tapped as Mr. Bearcat 2021
June 8, 2021
Chase Morris, a College of Arts and Sciences graduate, is UC's 2021 Mr. Bearcat.
U.S. News top grad school rankings include several UC programs
March 30, 2021
Several graduate school programs at UC improve in latest U.S. News and World Report rankings, including from nursing, medicine, engineering, criminal justice, law and business.
Protect Company Assets by Mitigating Cyber Risks
April 8, 2021
Cyber threats and insurance have become a ubiquitous business issue. Insurance is intended as a vehicle to transfer catastrophic risk to carriers contractually in consideration for premium dollars. There is no coverage area where the risks evolve more rapidly than cyber, and so the insurance must evolve with it.
Tactical Treasury: Fraud prevention is a never-ending task
April 8, 2021
With Nacha rule changes coming in 2021, along with new treasury solutions that are advancing and adapting to a world with more ACH transactions, it’s important to understand how to follow them and mitigate fraud.