Paper , Order, or Assignment Requirements

• Do enough research on the nature and structure of the program that you choose, either in Gruber’s text or online so that you understand how the program works. Then, answer the following questions:
• Under what circumstances does your chosen program provide benefits? To whom are these benefits available? (It is ok to be general here)
• Explain how your chosen program will theoretically help individuals to smooth their consumption across states of the world. Why do we care about this?
• What is the economic justification for government provision of this type of insurance? Explain the adverse selection problem that would exist in a private-market equivalent of your chosen program. What is the result of adverse selection (in other words, why is this a bad thing)?
• What is a paternalistic argument for government involvement in this market?
• What kind of private behaviors might be crowded-out by government intervention in this context? How does the amount of crowd-out influence the effectiveness of the program at achieving its goals? Do you think there is a lot of scope for crowd-out in this setting? Why or why not?
• What is the potential kind of moral hazard resulting from this program? Do you think there is a lot of scope for moral hazard in this setting? Why or why not? Can you think of any other ways the program might reduce social efficiency rather than improve it?