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The marginal propensity to insure: An international analysis

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  • Yuan, Cheng
  • Jiang, Yu

Abstract

Many studies have indicated that income can significantly promote insurance consumption. However, such promoting effects may exhibit different characteristics at various income levels. In this paper, we apply the marginal propensity to insure (MPI) to measure the relationship between income and insurance consumption, and then empirically investigate the dynamics of the MPI as the income level changes using the data of 67 countries and regions between 2000 and 2015. Results show that the MPI of life insurance first increases and then decreases, while the MPI of non-life insurance increases stably, as the income level increases from low to high. We interpret this finding according to the changes in the natural demand and the effective demand for insurance as the income level changes.

Suggested Citation

  • Yuan, Cheng & Jiang, Yu, 2020. "The marginal propensity to insure: An international analysis," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 102-109.
    • Handle: RePEc:eee:reveco:v:69:y:2020:i:c:p:102-109
    DOI: 10.1016/j.iref.2020.05.003
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    More about this item

    Keywords

    Marginal propensity to insure; Income level; Insurance consumption; Dynamic relationship;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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