Revisiting the insurance–growth nexus

Philipp Scharner, David Sonnenberger and Gregor Weiß

Economic Analysis and Policy, 2023, vol. 79, issue C, 525-539

Abstract: This paper revisits the relation between economic growth and life insurance consumption for a panel of 130 countries in the period between 2003 and 2016. To address endogeneity concerns, we instrument economic growth by the quality of governments’ regulations and show that economic growth positively affects different measures of insurance consumption. Additionally, we find that the share of income households spend on life insurance increases as economies become wealthier. Our findings thus support the demand-following and feedback hypotheses, which state that economic growth contributes to insurance sector development. Finally, we provide evidence that these effects are stronger for middle- compared to high-income economies. Consistent with the idea that the marginal propensity to consume is especially large in low-income economies, we cannot find any evidence that economic growth affects insurance consumption in these countries.

Keywords: Insurance–growth nexus; Life insurance; Feedback hypothesis; Demand-following hypothesis; IV regression (search for similar items in EconPapers)
JEL-codes: C36 G22 O47 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592623001194
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:79:y:2023:i:c:p:525-539

DOI: 10.1016/j.eap.2023.06.007

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().