Template-type: ReDIF-Paper 1.0
Author-Name: Arthur M. Downing
Author-Workplace-Name: All Souls College, Oxford University
Author-Email: arthurdowning6834@gmail.com
Title: To claim or not to claim? 
Abstract: Friendly Societies in New Sealand, 1879-1884 Abstract: Friendly societies were voluntary associations offering members sickness and medical
insurance. By the end of the nineteenth century they were one of the most important forms of formal sickness and health insurance around the English-speaking world. A
number of historians and economists have argued the competitive advantage of the friendly societies lay in their ability to monitor claims and curtail opportunism. This
paper tests this claim, using a newly compiled panel dataset of societies operating in New Zealand in the 1870s and 1880s. The statistical material compiled by the New
Zealand Registrar of friendly societies was of exceptional quality. Critically the Registrar collected information on the age structure of members in a large number of
societies over a number of years. This allows us to test the impact of various behavioural and financial variables on claims rates, whilst controlling for the age of
the members of a society. Regression analysis shows that branches were able to overcome moral hazard in the sense that members did not mechanistically respond to
higher benefits scales by claiming more. However friendly societies faced diseconomies of scale. Larger, growing, and rural branches had higher claims rates,
either because members responded a more fragile system of monitoring, or because they felt less of a sense of obligation to their society. Moreover an increase in the
wealth of a society was associated with an increase in sickness claims. This suggests that members adjusted their behaviour in response to society’s ability to pay, and/or
that societies sanctioned more claims when times were good. These two results indicate that members often worked through ill health but were able to claim if a society’s finances were in good health.
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Length: 38 pages
Creation-Date: 2015-07-12
Number: _138
File-URL: http://www.economics.ox.ac.uk/materials/papers/14010/econ-and-history-138.pdf
File-Format: application/pdf
Handle: RePEc:nuf:esohwp:_138