An investigation into age and gender discrimination in the Alberta auto insurance industry netted economics PhD student Andrew Paulley results he has written about extensively for a scholar of his age. The study has now resulted in an award. This summer, Paulley won the Progressive Economics Forum’s Student Essay Contest.
The PEF is composed of 200 progressive economists working in academia, the labour movement, and for activist research organizations. Their annual prize, which has both a graduate and undergraduate category, carries a purse of $1000.
Paulley’s essay, Age and Gender Price Discrimination for Auto Insurance in Alberta, Canada: Evidence of Anti-Competitive Behaviour, looks at insurance premium rates across eight regions of Alberta and argues that these rates cannot be determined solely by driver profile, coverage levels, location or insurance brands. Instead, the PhD student demonstrates that insurance brands pick and choose which type of consumer they compete for, then set premiums for those consumers across Alberta. They are uninterested in 30% higher, or more than the industry average. Paulley also finds brands owned by the same firm target the same or avoid the same consumers, further limiting overall competition.
“Many of these firms are not competing in specific market segments – a fact that he shows through the price discrimination by age and gender,” the PEF wrote in its analysis of Paulley’s paper. “This and other discrimination results in an illusion of competition as most consumers only have a portion of the market competing for their business. Further, Paulley ultimately concludes that the Alberta insurance regulator is chronically mis-understanding the level at firms are exercising market power.”
Paulley has also written about the issue for the Canadian Anti-Monopoly Project where he serves as a fellow.
“I am very happy to have received this award from the Progressive Economics Forum and contribute to the forum’s goal of measuring and understanding the differences between conventional free-market economic theory and how modern industries today actually operate,” Paulley said. “The award will help me continue my research agenda of understanding competition in Canada’s major industries and measuring the cost to consumers from inadequate competition and regulation.”
Return to the Department of Economics website.
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