##common.pageHeaderLogo.altText##
Top Academic Journal of Economics and Statistics
Vol. 7 No. 4 (2022): July-August
Original Articles

ASSESSING THE RATIONALITY OF LIFE INSURANCE BEHAVIOR AMID ECONOMIC UNCERTAINTY

Download
  • Prof. Natalia Ivanovna Grishchenko
Prof. Natalia Ivanovna Grishchenko
Doctor of Finance, Professor, Analyst at the Social Policy Institute, National Research University – Higher School of Economics, Russia

Published 2023-09-13

Keywords

  • Life insurance,
  • economic uncertainty,
  • Russia,
  • financial behavior,
  • social commitments.

How to Cite

Natalia, I. G. (2023). ASSESSING THE RATIONALITY OF LIFE INSURANCE BEHAVIOR AMID ECONOMIC UNCERTAINTY. Top Academic Journal of Economics and Statistics, 7(4), 1–11. Retrieved from http://topjournals.org/index.php/TAJES/article/view/333

Copyright (c) 2023 Top Academic Journal of Economics and Statistics

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Abstract

Life insurance plays a pivotal role in long-term investments and the sustained growth of economies, complementing personal savings. This financial product supports individuals in critical life events such as marriage, birth, death, casualty, and retirement. In developed countries like Japan, the United Kingdom, and France, life insurance premiums constituted a substantial portion of total insurance premiums in recent years Economic volatility, crises, and uncertain conditions significantly influence the demand for life insurance. However, the individual responses to these economic uncertainties in the context of life insurance remain a subject of ongoing theoretical and empirical debate  Understanding and regulating individuals' behavior concerning life insurance, savings, personal investments, and protection are crucial for economic policy, insurance marketing, and potential policyholders. As global aging trends shift public social commitments to personal responsibility, funded insurance plans like pensions, healthcare, and unemployment gain importance Remarkably, Russia has shown remarkable growth in its life insurance market, outpacing many developed and developing countries. This growth occurs amid unpredictable economic shocks, including a drop in oil prices, sanctions, and a lack of structural reforms. Despite resurging oil prices, Russia's GDP growth remains modest, and real disposable income has steadily declined, contributing to increased poverty levels In this backdrop of economic and social uncertainty, this study explores how individuals in Russia respond to the evolving economic landscape in their life insurance behavior

Download

References

  1. Alexandersen, N., Anell, A., Kaarboe, O., Lehto, J.S., Tynkkenen, L.K., Vrangbaek, K. (2016), The development of voluntary private health insurance in the Nordic countries, Nordic Journal of Health Economics, 4 (1): 68-83.
  2. Ariely, D. (2008),Predictably irrational. The hidden forces that shape our decisions. An Imprint of Harper Collins Publishers.
  3. Barros, G. (2010),Herbert A. Simon and the concept of rationality: boundaries and procedures, Revista de Economia Política, 30, 455-472.
  4. Binmore, K. (2009),Rational decisions. Princeton, Princeton University Press.
  5. Bommier, A., Villeneuve, B. (2012),Risk aversion and the value of risk to life, Journal of Risk and Insurance, 79 (1), 77-103.
  6. Burič, M.N., Smolovič, J.C., Božovič, M.L., Filipovič, A.L. (2017),Impact of economic factors on life insurance development in Western Balkan Countries, Zbornik radova Ekonomskog fakulteta u Rijeci, 35 (2), 331-352.
  7. Deaton, A., Muellbauer, J. (1980),Economics and Consumer Behavior, Cambridge University Press.
  8. Dionne, G., Eeckhaudt, L. (1984),Insurance and saving: some further results, Insurance: Mathematics and Economics, 3 (2), 101-110.
  9. Freitas N.E-M., Martins O.J. (2014),Health, pension benefits and longevity: how they affect household savings? The Journal of the Economics of Ageing, 3, 21-28.
  10. Friedman, M., Savage, L. J. (1948),The Utility Analyses of Choices Involving Risk, Journal of Political Economy, 56 (4), 279-304.
  11. Gilboa, J., Maccheroni, F., Marinacci, M., Schmeidler, D. (2010),Objective and subjective rationality in a multiple prior model, Econometrica. 78 (2), 755-770.
  12. Grainich, D., Peter, R. (2017),On the Interaction between the Demand for Saving and the Demand for Risk Reduction, Seminars of European Group of Risk and Insurance Economists, 1-22.
  13. Hennessy, D. (2008),Prevention and cure efforts both substitute and complement, Health Economics, 17(4), 503–511.
  14. Johnson, E.J., Hershey, J., Meszaros, J., Kunreuther, H. (1993),Framing, probability distortions, and insurance decisions, Journal of Risk and Uncertainty, 7 (1), 35-51.
  15. Kahneman, D., Tversky, A. (1972),Subjective probability: a judgment of representativeness, Cognitive psychology, 3, 430-454.
  16. Kimball, M.S. (1990),Precautionary Saving in the Small and in the Large, Econometrica, Econometric Society, 58(1), 53-73.
  17. Kunreuther, H., Slovic, P. (1978),Economics, Psychology, and Protective behavior, American Economic Review, 68 (2), 64-69.
  18. Kunreuther, H., Pauly, M. (2005),Insurance Decision-Making and Market Behavior, Foundation and Trends in Microeconomics, 1 (20), 63–127.
  19. Kunreuther, H., Pauly, M. (2014),Behavioral Economics and Insurance: Principles and Solutions, Working Paper, 120.
  20. Lee, C.C., Chiu, Y.B. (2012),The impact of real income on insurance premiums: Evidence from panel data, International Review of Economics and Finance, 21(1), 246-260.
  21. Menegatti, M., Rebessi, F. (2011), On the substitution between saving and prevention, Mathematical Social Sciences, 62 (3), 176–182.
  22. Mingus, M. S. (2007),Bounded rationality and organizational influence: Herbert Simon and the behavioural revolution. Handbook of decision making, 2, 61-79.
  23. Mitra, A. (2017),Influencers of Life Insurance Investments: Empirical Evidence from Europe,Australasian Accounting, Business and Finance Journal, 11(3), 87-102.
  24. Mossin, J. (1968),Aspects of rational insurance purchasing, Journal of Political Economy, 46 (4), 553-568.
  25. Muller, W. (2001),Strategies, heuristics, and the relevance of risk-aversion in a dynamic decision problem, Journal of Economic Psychology, 22, 493–522.
  26. Muramatsu, R., Fonseca, P. (2012),Freedom of choice and bounded rationality: a brief appraisal of behavioral economists,Revista de Economia Política, 32(3), 445- 458.doi.org/10.1590/S0101-31572012000300006
  27. Nadash, P., Cuellar, A.E. (2017),The emerging market for supplemental long term care insurance in Germany in the context of the 2013 Pflege-Bahr reform, Health Policy, 121 (6), 588-593.
  28. Neumann, J., Morgensten, O. (1980),Theory of Games and Economic Behavior. Princeton University.
  29. OECD. Stat. Accessed June 30 2018. http://stats.oecd.org/Index.aspx?DatasetCode=INSIND.
  30. Pauly, M.V. (1990),The Rational Nonpurchase of Long-term-Care Insurance, Journal of Political Economy, 98 (1), 153-68.
  31. Quiggin, J. (1982),A theory of anticipated utility, Journal of Economic Behavior and Organization, 3(4),323-43.
  32. Rick, S., Loewenstein, G. (2008),The role of emotion in economic behavior. Chapter 9.Handbook of Emotions. The Guilford Press.
  33. Rizzi, J. (2009),Behavioral Basis of the Financial Crisis, Senior Investment Strategist, CapGen Financial.
  34. Russia Longitudinal Monitoring Survey, RLMS-HSE, conducted by NRU“Higher School of Economics" and OOO “Demoscope” together with Carolina Population Center,University of North Carolina at Chapel Hill and the Institute of Sociology of the Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences.Accessed June 30 2018. https://www.hse.ru/en/rlms/
  35. The Russian Economy: Modest Growth Ahead. 39th issue of the Russia Economic Report provides an assessment of recent economic developments and the outlook for the period 2018-2020. Accessed June 30 2018.http://www.worldbank.org/en/country/russia/publication/rer.
  36. Savage, L.J. (1954),The Foundations of Statistics. New York, John Wiley.
  37. Schiffman, L., Kanuk, L. (2007),Consumer Behavior, Pearson.
  38. Shefrin, H.M., Thaler, R.H. (1988),The Behavioral Life-cycle hypothesis, Economic Inquiry, 26 (4), 609-643.
  39. Simon, H.A. (1955),A Behavioral Model of Rational Choice, The Quarterly Journal of Economics, 69 (1),99-118.
  40. Simon, H.A. (1959),Theories of Decision-Making in Economics and Behavioral Science,The American Economic Review, 49 (3), 253-283.
  41. Sliwinski, A., Michalski, T., Roszkiewicz, M. (2013),Demand for Life Insurance – An Empirical Analysis in the Case of Poland,The Geneva Papers, 38, 62–87.
  42. Slovic, P. (1972), Psychological study of human judgment: implications for investment decision making, Journal of Finance, 27 (4), 779-799.
  43. Tversky, A., Fox, C.R. (1995), Weighing risk and uncertainty, Psychological Review, 102 (2), 26-283.
  44. Tversy, A., Shafir, E. (1992),Choice under conflict: The dynamics of deferred decision, Psychological Science, 3 (6), 358-361.
  45. Vlaev, I. (2018),Local choices: rationality and the contextuality of decision-making,Brain Sciences, 8 (1).
  46. Wakker, P.P., Thaler, R.H., Tversky, A. (1997), Probabilistic Insurance. Center for Economic Research,Tilburg University.
  47. Zimmer, A., Schade, C., Gründl, H. (2009),Is Default Risk Acceptable When Purchasing Insurance? Exp. Evidence for Different Probability Representations, Reasons for Default, and Framings,Journal of Economic Psychology, 30, 11-23.
  48. Zinkhan, G.M. (1992). Human Nature and Models of Consumer Decision Making. Journal of Advertising,21, (4) II-III.

Similar Articles

1 2 3 4 > >> 

You may also start an advanced similarity search for this article.