Daniel L. McFadden is the E. Morris Cox Professor of Economics and Director of the Econometrics Laboratory at the University of California, Berkeley. He received the 2000 Nobel Prize in Economics for his work in econometric methods for individual decision-making behavior. Professor McFadden was elected to the American Academy of Arts & Sciences in 1977; to the National Academy of Science in 1981; and to the American Philosophical Society in 2006. He received the John Bates Clark Medal from the American Economics Association in 1975; in 1985 he delivered the Jahnsson Foundation Lectures in Helsinki, Finland; in 1986 he won the Frisch Medal from the Econometrics Society; in 2000 he received the Nemmers Prize in Economics from Northwestern University; and in 3002 he received the Richard Stone prize. Following the completion of his PhD in 1962 at the University of Minnesota, Professor McFadden joined the Berkeley's economics department. In 1979, Professor McFadden moved to the economics faculty at MIT, and in 1991 he returned to UC Berkeley. Professor McFadden's research is currently concentrated on the effect of consumer perceptions and incentives on market efficiency, particularly in markets for risk.
REGULATION OF MARKETS FOR RISK---Lessons from Medicare Part D
This paper examines the Medicare Part D prescription drug insurance program as a bellwether for designs of private, non-mandatory insurance markets that control adverse selection and assure adequate access and coverage. I model Part D enrollment and plan choice assuming a discrete dynamic decision process that maximizes life-cycle expected utility, and perform counterfactual policy simulations of the effect of market design on participation and plan viability. The model correctly predicts high Part D enrollment rates among the currently healthy, but also strong adverse selection in choice of level of coverage. I analyze alternative designs that preserve plan variety, and draw conclusions more generally for the organization and regulation of markets for insurance against risk, including markets for insurance of financial risks..