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Tax Incentives and the Demand for Life Insurance: Evidence from Italy

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Jappelli, Tullio
Pistaferri, Luigi

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Abstract

The theoretical literature suggests that taxation can have a large impact on household portfolio selection and allocation. In this Paper we consider the tax treatment of life insurance, considering the cancellation of tax incentives in Italian life insurance contracts for investors with high marginal tax rates and the introduction of incentives for those with low rates. Using repeated cross-sectional data from 1989 to 1998, we find that the tax reforms had no effect on the decision to invest in life insurance or the amount invested. The likely explanations are the lack of information and lack of commitment to long-term investment.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2787.

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Date of creation: May 2001
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Handle: RePEc:cpr:ceprdp:2787

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Related research
Keywords: Portfolio Choice; Saving; Tax Incentives;

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Find related papers by JEL classification:
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Poterba, James M & Venti, Steven F & Wise, David A, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall. [Downloadable!] (restricted)
  2. James Banks & Tanner, S, 2000. "Household portfolios in the UK," IFS Working Papers W00/14, Institute for Fiscal Studies. [Downloadable!]
  3. Luigi Guiso & Tullio Jappelli, 2000. "Household Portfolios in Italy," CSEF Working Papers 43, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
    Other versions:
  4. Hochguertel, Stefan & Alessie, Rob & van Soest, Arthur, 1997. " Saving Accounts versus Stocks and Bonds in Household Portfolio Allocation," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(1), pages 81-97, March. [Downloadable!] (restricted)
  5. James M. Poterba, 2001. "Taxation and Portfolio Structure: Issues and Implications," NBER Working Papers 8223, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. King, Mervyn A. & Leape, Jonathan I., 1998. "Wealth and portfolio composition: Theory and evidence," Journal of Public Economics, Elsevier, vol. 69(2), pages 155-193, June. [Downloadable!] (restricted)
  7. Feldstein, Martin S, 1976. "Personal Taxation and Portfolio Composition: An Econometric Analysis," Econometrica, Econometric Society, vol. 44(4), pages 631-50, July. [Downloadable!] (restricted)
  8. Engen, Eric M & Gale, William G & Scholz, John Karl, 1996. "The Illusory Effects of Saving Incentives on Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 113-38, Fall. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Juan Ayuso & Juan F. Jimeno & Ernesto Villanueva, 2007. "The effects of the introduction of tax incentives on retirement savings," Banco de España Working Papers 0724, Banco de España. [Downloadable!]
  2. Jappelli, Tullio & Pistaferri, Luigi, 2003. "Tax Incentives to Saving and Borrowing," CEPR Discussion Papers 3881, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Luigi Guiso & Tullio Jappelli & Mario Padula, 2009. "Pension Risk, Retirement Saving and Insurance," Economics Working Papers ECO2009/18, European University Institute. [Downloadable!]
    Other versions:
  4. Renata Bottazzi & Tullio Jappelli & Mario Padula, 2009. "The Portfolio Effect of Pension Reforms," CSEF Working Papers 234, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
    Other versions:
  5. Nuno Martins & Ernesto Villanueva, 2005. "The impact of interest-rate subsidies on long-term household debt: evidence from a large program," DNB Working Papers 026, Netherlands Central Bank, Research Department. [Downloadable!]
    Other versions:
  6. Tullio Jappelli & Luigi Pistaferri, 2002. "Tax Incentives for Household Saving and Borrowing," CSEF Working Papers 83, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
  7. Mathias Sommer, 2007. "Savings motives and the effectiveness of tax incentives – an analysis based on the demand for life insurance in Germany," MEA discussion paper series 07125, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
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