Description: Department of Economics

Description: Johannes Spinnewijn

| LSE Economics |

| CV |

| Publications |

| Working Papers|

| In Progress|

| Teaching|

| Miscellaneous|

Johannes Spinnewijn

Position: Lecturer (Assistant Professor) in Economics

Research Interests: Public Economics, Behavioral Economics, Applied Theory

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Working Papers

  • The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden - REVISED - (with Jonas Kolsrud, Camille Landais and Peter Nilsson) - Slides

    Abstract: This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value and incentive costs of unemployment benefits paid at different times during a spell. Our approach allows us to revisit separate arguments for inclining or declining profiles put forward in the theoretical literature and to identify welfare-improving changes in the benefit profile that account for all relevant arguments jointly. For the empirical implementation, we use administrative data on unemployment, linked to data on consumption, income and wealth in Sweden. First, we exploit duration-dependent kinks in the replacement rate and find that, if anything, the moral hazard cost of benefits is larger when paid earlier in the spell. Second, we find that the drop in consumption affecting the insurance value of benefits is large from the start of the spell, but further increases throughout the spell. In trading off insurance and incentives, our analysis suggests that the flat benefit profile in Sweden has been too generous overall. However, both from the insurance and the incentives side, we find no evidence to support the recent introduction of a declining tilt in the profile.

  • Inferring Risk Perceptions and Preferences using Choice from Insurance Menus: Theory and Evidence - REVISED - (with Keith Ericson, Philipp Kircher and Amanda Starc)

    Abstract: Demand for insurance can be driven by high risk aversion or high risk. We show how to separately identify risk preferences and risk types using only choices from menus of insurance plans. Our revealed preference approach does not rely on rational expectations, nor does it require access to claims data. We show what can be learned non-parametrically from variation in insurance plans, offered separately to random cross-sections or offered as part of the same menu to one cross-section. We prove that our approach allows for full identification in the textbook model with binary risks and extend our results to continuous risks. We illustrate our approach using the Massachusetts Health Insurance Exchange, where choices provide informative bounds on the type distributions, especially for risks, but do not allow us to reject homogeneity in preferences.

  • Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets (with Ben Handel and Jon Kolstad)

    Abstract: A large literature has analyzed pricing inefficiencies in health insurance markets due to adverse selection. Recent evidence, however suggests that many consumers have information frictions that lead to poor health plan choices for given market prices. In this paper we develop a general framework to study insurance market equilibrium and evaluate policy interventions in the presence of choice frictions. Friction-reducing policies can increase welfare by facilitating better matches between consumers and plans, but can decrease welfare by increasing the correlation between willingness-to-pay and costs, exacerbating adverse selection. We identify relationships between the underlying distributions of consumer (i) costs (ii) surplus from risk protection and (iii) choice frictions that determine whether friction-reducing policies will be on net welfare increasing or reducing. We extend the analysis to study how policies to improve consumer choices interact with the supply-side policy of risk-adjustment transfers and show that the effectiveness of the latter policy can have important implications for the effectiveness of the former. We implement the model empirically using proprietary data on insurance choices, utilization, and consumer information from a large firm. We leverage structural estimates from prior work with these data and highlight how the model's micro-foundations can be estimated in practice. We find that friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare. Risk-adjustment transfers are very complementary, substantially mitigating the negative impact of friction-reducing policies, but having little effect in their absence.

  • Rewarding Schooling Success and Perceived Returns to Education: Evidence from India - R&R (2nd round) at JEBO - (with Sandra Sequeira and Guo Xu)

    Abstract: This paper tests two specific mechanisms through which individuals may form expectations about returns to investments in education: receiving recognition for one's schooling performance, and exposure to successful students through family or social networks. Using a regression discontinuity design, we study the impact of a fellowship program recognizing the schooling performance of young girls in secondary school in India. We find that the fellowship award is associated with a significant increase in the perceived value of education, by both increasing the perceived mean of earnings and decreasing the perceived variance in earnings associated with additional years of schooling. Being exposed to successful students does not affect perceived returns to education for those in their family or social networks. This exposure is however associated with holding more information on potential sources of funding for schooling and a higher intention to apply for the fellowship.

Work in Progress

  • The Perception of Employment Prospects over the Spell of Unemployment (with A. Mueller and G. Topa)

  • Risk-based Selection in Unemployment Insurance: Evidence and Implications (with C. Landais, A. Nekoei, P. Nilsson and D. Seim)

  • Designing Retirement Benefits: Theory and Evidence from Sweden (with J. Kolsrud and C. Landais)

  • Unemployment Policy and the Long-Term Impact of Job Loss (with C. Landais)

Current Courses Taught

  • Public Economics (PhD, LSE course, ec534)
  • Public Economics (MSc, LSE course, ec426)
  • Public Economics (MPA, LSE course, ec410)
  • Introductory Microeconomics (Summer, LSE course, ec101)

Press Coverage/Other Writings

  • "Hard cash or a secure job - which is better?" featured in Financial Times (February 7, 2009) (link)
  • "The Role of Commitment" comment on "On the interaction between subsidiarity and interpersonal solidarity" by Jacques Dreze (link)
  • "En als we langdurig werklozen meer zouden betalen?" Op-ed in De Morgen (February 12, 2012) (link)
  • "De ivoren toren van economen is een mythe" Op-ed in De Standaard (August 3, 2013) (link)
  • "De mythe van de hangmat" Op-ed in De Standaard (May 15, 2014) (link)

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