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Pension insurance, risk attitudes, and household asset allocation–evidence from China

Author

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  • Chen, Hua
  • Guo, Yunxiao
  • Li, Ding
  • Xiao, Han

Abstract

This research, utilizing data from the China Household Finance Survey (CHFS) conducted in 2017, 2019, and 2021, examines the influence of pension insurance on asset allocation among households in China. The results reveal that increased pension balances are associated with a greater propensity to invest in riskier assets. Specifically, a 10 % rise in pension account balances corresponds to a 5 % increase in the likelihood of engaging in the risk asset market, alongside a 1.7 % increase in the allocation to such assets. Furthermore, the study identifies notable disparities in the effects of pension insurance on market participation, particularly when considering urban-rural distinctions, with pronounced effects observed in rural households. Additionally, higher pension balances are linked to a heightened risk preference, and the observed heterogeneity in economic development levels aligns with variations in participation in the risk asset market. These findings highlight the significant role of pension insurance in shaping investment behaviours and risk preferences, as well as its potential to bolster domestic demand and stimulate economic growth. This underscores the essential function of pension insurance in financial planning and the formulation of policy.

Suggested Citation

  • Chen, Hua & Guo, Yunxiao & Li, Ding & Xiao, Han, 2025. "Pension insurance, risk attitudes, and household asset allocation–evidence from China," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 2180-2191.
    • Handle: RePEc:eee:ecanpo:v:86:y:2025:i:c:p:2180-2191
    DOI: 10.1016/j.eap.2025.05.042
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