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Aligning common prosperity with sustainable development goals 3 and 7 through sustainable insurance

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  • Zhou, Wei
  • Li, Xuelian
  • Lin, Jyh-Horng
  • Chang, Chuen-Ping
  • Cai, Yujie

Abstract

This paper develops a capped-call option model to evaluate sustainable insurance for achieving common prosperity. It integrates policyholder protection (Sustainable Development Goal 3 (SDG 3)) and the cap-and-trade mechanism (SDG 7) in modeling the Gini coefficient, thereby connecting SDGs 3 and 7 with common prosperity. The main findings are as follows. Life insurance policies that prioritize saving features enhance policyholder protection (SDG 3) but can detract from common prosperity. This impact is magnified when the regulatory cap within the cap-and-trade scheme for carbon-intensive manufacturers becomes stricter. High investment risks for carbon-intensive manufacturers reduce policyholder protection but support common prosperity. A stricter cap-and-trade scheme (SDG 7) also reduces policyholder protection and contradicts common prosperity. This paper avoids concluding any inherent inconsistency between the SDGs and common prosperity, as our analysis is based on the structure-conduct-performance paradigm rather than a macro perspective. Policymakers should carefully balance objectives between SDG 3 and common prosperity to ensure that policies promoting individual security do not compromise broader societal well-being and economic equality, as outlined by the SDGs.

Suggested Citation

  • Zhou, Wei & Li, Xuelian & Lin, Jyh-Horng & Chang, Chuen-Ping & Cai, Yujie, 2024. "Aligning common prosperity with sustainable development goals 3 and 7 through sustainable insurance," Energy Economics, Elsevier, vol. 140(C).
    • Handle: RePEc:eee:eneeco:v:140:y:2024:i:c:s0140988324007424
    DOI: 10.1016/j.eneco.2024.108033
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    More about this item

    Keywords

    Cap-and-trade; Common prosperity; Gini coefficient; Sustainable development goals; Sustainable insurance;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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