Risky Business

An engaging and accessible examination of what ails insurance marketsand what to do about itby three leading economists The authors . . . do a masterful job of explaining the intractable complexities created by this socially vital activity.Martin Wolf, Financial Times, Best Books of 2022: Economics Why is dental insurance so crummy? Why is pet insurance so expensive? Why does your auto insurer ask for your credit score? The answer to these questions lies in understanding how insurance works. Unlike the market for other goods and servicesfor instance, a grocer who doesnt care who buys the stores broccoli or carrotsinsurance providers are more careful in choosing their customers, because some are more expensive than others. Unraveling the mysteries of insurance markets, Liran Einav, Amy Finkelstein, and Ray Fisman explore such issues as why insurers want to know so much about us and whether we should let them obtain this information; why insurance entrepreneurs often fail (and some tricks that may help them succeed); and whether wed be better off with government-mandated health insurance instead of letting businesses, customers, and markets decide who gets coverage and at what price. With insurance at the center of divisive debates about privacy, equity, and the appropriate role of government, this book offers clear explanations for some of the critical business and policy issues youve often wondered about, as well as for others you havent yet considered.