The Socioeconomic Distribution of Choice Quality: Evidence from Health Insurance in the Netherlands

We study how choice quality relates to socioeconomic factors, using population-wide data on health insurance choices and utilization in the Netherlands. We document a striking choice quality gradient with respect to socioeconomic status, finding that those with higher income, higher education, and training in quantitative fields make meaningfully better choices. Household income for the top 5 percent of decision-makers, in terms of surplus captured, is almost three times higher than for the bottom 5 percent. When jointly including all factors, education degree and field of study are more important predictors of choice quality than income and other financial variables.