Welfare State Economics (WSE) - Important terms/concepts

Week 1 – Insurance Theory
- Demand for insurance/ risk-aversion/ uncertainty/ decreasing marginal utility/
expected utility/ Graph/ calculation/ exercise
- Supply side of insurance/ risk-sharing
- Private provision of insurance
o Risk probabilities are independent (individual risk)
o Probabilities are less than one (risk, not certainty)
o Known/Estimable probabilities (risk, not certainty)
o No asymmetric information (!!)
 Moral hazard (hidden action)
 Combatting: experience rates (claims)/ deductibles/ co-
payments/ eligibility conditions/ graph
 Adverse selection (risk types)
 Model/graph
 Pooling equilibrium/ separating equilibrium/ exercise

Week 2 – COVID-19 and the Welfare State
- QALY= quality adjusted life year
- Maximum value of saved lives
- Short time work compensation = STWC

Week 3 – Health insurance
- Government intervention  Market failures/ redistribution
- Moral hazard costs/ co-payment/ elasticity/ Assignment
- QALY= quality adjusted life year = extra years (adjusted for quality)/ cost
- Grossman model  investment
- RAND Experiment/ Case-study/ elasticity

Week 4 – Poverty relief and retirement
- Government intervention
o Efficiency
o Redistribution
- In-cash versus in-kind (exercises/ graphs)
- Moral hazard effects (Graph)/ Training effects (graph), reducing moral hazard/
outside options
- Paper Early retirement age