Under which condition(s) would a strict welfare economist agree that an obese worker joining a workforce...

Under which condition(s) would a strict welfare economist agree that an obese worker joining a workforce imposes externalities through group health insurance?

a. If an obese worker uses more health care than non-obese workers and premiums rise

b. If an obese worker gets sick and misses work more often and the non-obese workers have to pick up the slack working short-handed

c. If the fact of insurance coverage makes all workers, obese and non-obese alike, start eating more and exercising less so that all gain weight and premiums rise

d. If an obese worker joining the workforce makes a single worker less proud of their annual group picture

Solutions

Expert Solution

Answer a. If an obese worker uses more health care than non-obese workers and premiums rise.

Reason- If obese worker uses more health care than non obese workers, the insurance company would start facing loss and will increase premiums.

Since the premium is same for everyone.

A non obese worker will find this premium too high as they need less healthcare. So it creates externality.

Rahul Sunny answered 2 years ago

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