The Demand for Life Insurance in OECD Countries

16 Pages Posted: 27 Aug 2007

See all articles by Donghui Li

Donghui Li

UNSW Australia Business School, School of Banking and Finance

Fariborz Moshirian

Institute of Global Finance, UNSW Business School

Pascal Nguyen

University of New South Wales

Timothy Wee

Citigroup, Inc. - Hong Kong

Abstract

This article examines the determinants of life insurance consumption in OECD countries. Consistent with previous results, we find a significant positive income elasticity of life insurance demand. Demand also increases with the number of dependents and level of education, and decreases with life expectancy and social security expenditure. The country's level of financial development and its insurance market's degree of competition appear to stimulate life insurance sales, whereas high inflation and real interest rates tend to decrease consumption. Overall, life insurance demand is better explained when the product market and socioeconomic factors are jointly considered. In addition, the use of GMM estimates helps reconcile our findings with previous puzzling results based on inconsistent OLS estimates given heteroscedasticity problems in the data.

Suggested Citation

Li, Donghui and Moshirian, Fariborz and Nguyen, Pascal and Wee, Timothy, The Demand for Life Insurance in OECD Countries. Journal of Risk & Insurance, Vol. 74, No. 3, pp. 637-652, September 2007, Available at SSRN: https://ssrn.com/abstract=1009734 or http://dx.doi.org/10.1111/j.1539-6975.2007.00228.x

Donghui Li

UNSW Australia Business School, School of Banking and Finance ( email )

Sydney, NSW 2052
Australia

Fariborz Moshirian (Contact Author)

Institute of Global Finance, UNSW Business School ( email )

Sydney, NSW 2052
Australia
+61 2 93855859 (Phone)
+61 2 94877519 (Fax)

Pascal Nguyen

University of New South Wales ( email )

Sydney, NSW 2052
Australia
(61) 2-9385-5773 (Phone)
(61) 2-9385-6730 (Fax)

HOME PAGE: http://www.banking.unsw.edu.au/pascalnguyen/

Timothy Wee

Citigroup, Inc. - Hong Kong

49/F, Citibank Tower - Citibank Plaza
3 Garden Road
Central
Hong Kong

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