Summary
We examine the relationship between claimant demographic characteristics (specifically, gender, age, and marital status) and the relative size of automobile third-party settlements. We present three possible theories to explain differences in payouts associated with gender and age: variations in risk attitudes, variations in negotiating costs, and discrimination. Results of empirical testing are consistent with differences in settlement amounts, particularly with respect to gender. These differences are examined and discussed along with suggestions for future research.
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Extract
Age and Gender Effects On Auto Liability Insurance Payouts
INTRODUCTION
The automobile is one of the most widely owned major assets in the United States. It is also the most likely source of individual liability. In 2002, more than 18.3 million accidents occurred on U.S. roads and highways, involving in excess of 30 million vehicles, injuring over 2.9 million, and killing more than 42,000. (U.S. Census Bureau, Statistical Abstract of the United States 2004-05). Automobile liability claims affect many Americans, both claimants and defendant drivers, and the consequences of settlement decisions are far reaching. Auto liability settlement amounts are influenced by many factors such as the claimant's degree of fault in causing the accident, the extent of the claimant's bodily injury, state negligence rules, and attorney involvement. Our purpose here is to investigate whether claimant demographics (namely, gender and age) also affect third-party payments.Other economic research to date provides reasons for potential differences in claimant payouts, namely, variations in claimant risk attitude, differences in negotiating preferences, and outright discrimination. The prior literature provides evidence of riskaversion differences as a function of gender and age. Levin, Snyder, and Chapman (1988), Powell and Ansic (1997), Jianakoplos and Bernasek (1998), Sunden and Surette (1998), and Schubert et al. (1999), in fact, all find that women are more risk averse than men in a variety of financial (i.e., speculative) decision-making contexts. Halek and Eisenhauer (2001) find greater relative risk aversion for women and the elderly for both pure and speculative risks. Brown (1987) and Riley and Chow (1992) also find greater relative risk aversion for the elderly.Prior studies also provide evidence of negotiation differences as a function of gender and age. Stuhlmacher and Walters (1999) show that women are more conflict averse in dispute settlement an...See the full content of this document
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