Australians denied insurance

When I saw this headline:

Australians refused insurance because of poor genes

And this headline (ht Marginal Revolution):

Australians denied insurance for genetic reasons

I immediately thought that they were talking about all of Australia.  Then I read the article and realised how ridiculous this thought was 🙂

Supposedly some insurers are not allowing insurance because of newly testable genetic risk.  Now how do you guys view this, I see two ways:

  1. It is good.  It gets rid of the asymmetric information problem to some degree, so that we can have the “optimal” level of insurance.  People that are low risk will now be able to insure themselves more cheaply afterall.
  2. It is bad.  There is an endowment issue – some people are endowed with bad genes, and we want to redistribute to these people to make up for it.

Personally, I think even if we believe the second issue it would be better to have an efficient insurance industry and then redistribute ex-post …

18 replies
  1. Eric Crampton
    Eric Crampton says:

    I want to be able to get insurance against an adverse genetic test, then get the genetic test and be charged an actuarily fair premium based on results, but with adverse outcomes hedged against in the prior market. How long ’till we get pre-screening insurance against testing results?

  2. Kimble
    Kimble says:

    Perhaps we should test for genetic abnormalities and restrict the ability for those “people” to procreate. Having some sort of procreation licensing system would probably be the most efficient way of doing this.

  3. Matt Nolan
    Matt Nolan says:


    I’m not sure how this relates to having an efficient insurance market. I can’t see how directly regulating peoples ability to have children can improve outcomes …

  4. Eric Crampton
    Eric Crampton says:

    Kimble, I hope you’re joking. While this sort of negative eugenics was an important, popular, and currently downplayed part of the “progressive” agenda of the 1920s, it’s rightly now repugnant.

  5. rauparaha
    rauparaha says:

    @Eric Crampton
    Is it the eugenic aspect or the infringement on people’s rights that’s repugnant? For example, would it be OK to require people to obtain a license to procreate if they merely had to show that they could adequately support a child? Or, supposing we could test for it, would it be OK for people to abort their own babies because they were abnormal?

    Sorry if that’s off-topic, I’m just curious about your opinion because I’m thinking of writing a post on population control (not necessarily in favour of it).

  6. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    I am reasonably sure he was trying to clarify what I meant by “efficiency” by reducing the issue to a ridiculous claim.

    In that sense it was a valid criticism to raise – as I meant efficiency in terms of having an efficient market, but it was possible to take my post in a less flattering light maybe.

  7. Eric Crampton
    Eric Crampton says:

    Rauparaha: For me, it’s the state coercion. Change your license policy instead to one where eligibility for welfare benefits requires going on implanted birth control that’s reversible once one comes off benefit, and choice is maintained. I don’t think abortion should be illegal, so I also don’t think that the parents’ reasons for abortion should matter much either. Now, I’d think folks deciding to abort a kid ’cause of the wrong eye colour would certainly not be the kind of folks I’d ever invite over for tea, but that’s parents’ choice, not the state’s. Similarly, if a deaf couple wanted to abort a kid because it had a high chance of hearing and so wouldn’t be part of deaf culture, I’d be pretty disgusted but I’d not think the state should get involved.

    There’s a pretty simple solution to population control: get rid of the programmes that let parents lay off costs on others. Then their decisions over number of children will be optimal. Any externalities would then be pecuniary only (one more person to bid up the price of resources, but also one more person to follow Julian Simon in working to take the sting out of scarcity).

  8. Brad Taylor
    Brad Taylor says:

    @Eric Crampton
    I’ve come across quite a few people advocating breeding licenses in casual conversation, it doesn’t seem that much more repugnant to add a genetic element.

    Some parents are bad, therefore we should stop them being parents. The unstated premise is that we have a wise and benevolent government capable of doing this. I don’t think eugenic thought is as anachronistic as you suggest. I’m guessing most people think eugenics was largely confined to Nazi Germany, and are unaware of the nastiness that happened in the States and elsewhere under liberal democratic governments. We’re not racist like those Nazis: we have nothing to worry about.

  9. Eric Crampton
    Eric Crampton says:

    Brad, I think we’ve got another example here of fiscal externalities generating meddlesome preferences – here of some of the most repugnant sort. How many folks talking this way take this tack because the costs of other folks’ childrearing decisions fall on the public purse?

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