On heterogeneity in non-life insurance. Part II

Abstract

Extract

While in some linear estimation problems the principle of unbiasedness can be said to be appropriate, we have just seen that in the present context we will have to appeal to other criteria. Let us first consider what we get from the maximum likelihood method. We do not claim any particular optimum property for this estimate of the risk distribution: it seems plausible however that one can prove a large sample result analogous to the classical result on maximum likelihood estimation.     

Choosing and using payment instruments: evidence from German microdata

Germans are still very fond of using cash. Of all direct payments transactions in 2008, cash accounted for an astounding 82 % in terms of number and for 58 % in terms of value. With a dataset that combines transaction information with survey data on payment behaviour of German consumers, we shed light on how individuals decide on their cash usage. We employ a two-stage empirical framework which jointly explains payment card ownership and the use of cash. Our results indicate that cash usage is compatible with systematic economic decision making. Consumers decide on the adoption of payment cards and then use available payment media according to transaction characteristics, the relative costs of cash and card usage, socio-demographic characteristics and their assessment of payment instruments’ characteristics. Importantly, older consumers use significantly more cash than younger consumers. We show that this difference in payment behaviour is not attributable to age as such but largely to differences in the characteristics of older and younger consumers. This suggests that the high cash intensity of older consumers cannot fully be attributed to the role of habit or to their slow adoption to new payment technologies.