In this installment of the Freakonomics Radio Book Club, the economist Amy Finkelstein explains why insurance markets are broken and how to fix them. Also: why can’t you buy divorce insurance?
Insurance markets offer an incredibly tantalizing and, dare I say, sexy prospect of providing a measure of certainty in a dangerous and uncertain world.
Amy Finkelstein is an economist at MIT.
She didnt always think of insurance as sexy, but once she converted to this position, Finkelstein, like most converts, has become a true believer.
She is the co author of a new book called risky why Insurance Markets fail and what to do about it.
Today on Freakonomics Radio, the latest installment of the Freakonomics radio book Club, we will find out whether insurance is actually sexy.
Along the way, we explore the many different forms of insurance that do exist and why some that don't exist.
Perhaps should I say this with all respect and love for my husband, I'd love divorce insurance.
Everything you always wanted to know about insurance.
But if you're, like most people, just didn't care enough to ask, this is Freakonomics Radio, the podcast that explores the hidden side of everything with your host Stephen Dubner.
Amy Finkelstein wrote her new book, Risky Business, with two other economists, Liron Inov from Stanford and Ray Fisman from Boston University.
Finkelstein says her love affair with insurance, her words, began when she was a junior staffer on the Council of Economic Advisors.
It was in 1990, 719 98, during the Clinton administration, and Janet Yellen was the chair.
One of the really fun things about the Council of Economic Advisors is its quite small.
You know, theres 2030 people there, but it has the same scope of things it needs to advise the president on as the treasury department, which has tens of thousands of employees.
So if youre a, you know, eager young staffer with no life, and I qualified on all those dimensions, you get to work on all kinds of things.
When I looked back at what were the things that really excited me, I had gotten to work on natural disaster insurance, on automobile insurance, on unemployment insurance.
The common denominator, it turned out, was insurance.
From there, Finkelstein got her PhD in economics from MIT.
She has since won major awards for her research, most of which is about health insurance.
If her name or voice sound familiar, you may remember a free economics radio episode from 2015 called how do we know what really works in healthcare?