The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Social Insurance and Public Policy

  • Jonathan Gruber
Reference work entry


Social insurance expenditures are the largest and fastest-growing component of government expenditures in the developed world. The design of social insurance programmes reflects the trade-off between insurance and incentives. This article reviews the impact of social insurance programmes on both insurance against adverse events and incentives for adverse behaviour. It concludes with lessons for optimal social insurance programme design.


Administrative efficiency Adverse selection Asymmetric information Consumption smoothing Crowding out Defined benefit and defined contribution social insurance Disability insurance Expected utility Experience rating Health insurance Imperfect observability Labour market search Layoffs Leisure Mandatory saving Market failure Moral hazard Paternalism Replacement rates Retirement Risk Self-insurance Social insurance Social Security in the United States Supply-side risk bearing Unemployment durations Unemployment insurance Workers’ compensation 

JEL Classification

This is a preview of subscription content, log in to check access.


  1. Akerlof, G.A. 1970. The market for lemons: Quality uncertainty and the market mechanism. Quarterly Journal of Economic 84: 488–500.CrossRefGoogle Scholar
  2. Anderson, P.M., and B.D. Meyer. 2000. The effects of the unemployment insurance payroll tax on wages, employment, claims and denials. Journal of Public Economics 78: 81–106.CrossRefGoogle Scholar
  3. Baily, M. 1978. Some aspects of optimal unemployment insurance. Journal of Public Economics 10: 379–402.CrossRefGoogle Scholar
  4. Browning, M., and T. Crossley. 2001. Unemployment insurance levels and consumption changes. Journal of Public Economics 80: 1–23.CrossRefGoogle Scholar
  5. Case, A. 1995. Symposium on consumption smoothing in developing countries. Journal of Economic Perspectives 9(3): 81–82.CrossRefGoogle Scholar
  6. Chetty, R., and A. Looney. 2006. Consumption smoothing and the welfare consequences of social insurance in developing economies. Journal of Public Economics 90: 2351–2356.CrossRefGoogle Scholar
  7. Currie, J., and J. Gruber. 1996a. Saving babies: The efficacy and cost of recent changes in the Medicaid eligibility of pregnant women. Journal of Political Economy 104: 1263–1296.CrossRefGoogle Scholar
  8. Currie, J., and J. Gruber. 1996b. Health insurance eligibility, utilization of medical care, and child health. Quarterly Journal of Economics 111: 431–466.CrossRefGoogle Scholar
  9. Cutler, D. 2002. Equality, efficiency and market fundamentals: The dynamics of international medical care reform. Journal of Economic Literature 40: 881–906.CrossRefGoogle Scholar
  10. Cutler, D.M., and S.J. Reber. 1998. Paying for health insurance: The trade-off between competition and adverse selection. Quarterly Journal of Economics 113: 433–466.CrossRefGoogle Scholar
  11. Cutler, D., and R. Zeckhauser. 2000. The anatomy of health insurance. In Handbook of halth economics, ed. A. Culyer and J. Newhouse. Amsterdam: North-Holland.Google Scholar
  12. Feldstein, M.S. 1973. The welfare loss of excess health insurance. Journal of Political Economy 81: 251–280.CrossRefGoogle Scholar
  13. Feldstein, M.S., and D. Altman. 1998. Unemployment insurance savings accounts. Working paper No. 6860. Cambridge, MA: NBER.Google Scholar
  14. Finkelstein, A., and J. Poterba. 2004. Adverse selection in insurance markets: Policyholder evidence from the U.K. annuity market. Journal of Political Economy 112: 183–208.CrossRefGoogle Scholar
  15. Gertler, P., and J. Gruber. 2002. Insuring consumption against illness. American Economic Review 92: 51–70.CrossRefGoogle Scholar
  16. Gruber, J. 1997. The consumption smoothing benefits of unemployment insurance. American Economic Review 87: 192–205.Google Scholar
  17. Gruber, J. 2000. Disability insurance benefits and labor supply. Journal of Political Economy 108: 1162–1183.CrossRefGoogle Scholar
  18. Gruber, J. 2005. Public finance and public policy, 1st ed. New York: Worth Publishers.Google Scholar
  19. Gruber, J., and D.A. Wise. 1999. Introduction and summary. In Social security and retirement around the world, ed. J. Gruber and D.A. Wise. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  20. Gruber, J., and D.A. Wise. 2008. Social security and well-being around the world. Chicago: University of Chicago Press.Google Scholar
  21. Gruber, J., and A. Yelowitz. 1999. Public health insurance and private savings. Journal of Political Economy 107: 1249–1274.CrossRefGoogle Scholar
  22. Krueger, A.B.. 1991. Workers’ compensation insurance and the duration of workplace injuries. Mimeo: Princeton University.Google Scholar
  23. Krueger, A.B.., and B.D. Meyer. 2002. Labor supply effects of social insurance. In Handbook of public economics, vol. 4, ed. A.J. Auerbach and M. Feldstein. Amsterdam: North-Holland.Google Scholar
  24. Lurie, N., N.B. Ward, M.F. Shapiro, and R.H. Brook. 1984. Termination from MediCal – Does it affect health? New England Journal of Medicine 311: 480–484.CrossRefGoogle Scholar
  25. Meyer, B.D. 1989. A quasi-experimental approach to the effects of unemployment insurance. Working paper No. 3159. Cambridge, MA: NBER.Google Scholar
  26. Newhouse, J. 1996. Reimbursing health plans and health providers: Selection vs. efficiency in production. Journal of Economic Literature 34: 1236–1263.Google Scholar
  27. Newhouse, J.P., and The Insurance Experiment Group. 1993. Free for all? Lessons from the RAND health insurance experiment. Cambridge, MA: Harvard University Press.Google Scholar
  28. Pettersson-Lidbom, P., and P.S. Thoursie. 2006. Temporary disability insurance and labor supply: Evidence from a natural experiment. Mimeo: Stockholm University.Google Scholar
  29. Rothschild, M., and J. Stiglitz. 1976. Equilibrium in competitive insurance markets: An essay on the economics of imperfect information. Quarterly Journal of Economics 90: 629–649.CrossRefGoogle Scholar
  30. Topel, R.H. 1983. On layoffs and unemployment insurance. American Economic Review 73: 541–559.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jonathan Gruber
    • 1
  1. 1.