Flexible Spending Accounts as Insurance
We model flexible spending accounts (FSAs) as a special type of insurance policy. We prove the following results given losses drawn from a continuous distribution: (1) the optimal election amount, "F"-super-*, is increasing in the consumer's level of risk aversion; (2) "F"-super-* is increasing in the level of the maximum loss; If utility is decreasing in absolute risk aversion (DARA), then "F"-super-* is (3) decreasing in income and (4) increasing in the marginal tax rate. Copyright 2003 The Journal of Risk and Insurance.
Year of publication: |
2003
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Authors: | Cardon, James H. ; Showalter, Mark H. |
Published in: |
Journal of Risk & Insurance. - American Risk and Insurance Association - ARIA, ISSN 0022-4367. - Vol. 70.2003, 1, p. 43-51
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Publisher: |
American Risk and Insurance Association - ARIA |
Saved in:
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