The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Risk Adjustment

  • Randall P. Ellis
Reference work entry


Risk adjustment is used in settings with uncertainty to make payments or allow comparisons of outcomes while controlling for exogenous risk factors that explain variations in the outcome of interest, such as spending, utilisation, quality or death. This article focuses on the conceptual and empirical uses of risk adjustment in health economics, where patient-level risk factors are commonly used to explain spending and other outcomes.


Adverse selection Biased selection Health economics Health insurance Health outcomes Life insurance Life tables 

JEL Classifications

G22 I11 I13 I182 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Randall P. Ellis
    • 1
  1. 1.