Risk attitudes and private disability insurance holdings

Christos I. Giannikos (), Andreas Kakolyris () and Tin Shan Suen ()
Additional contact information
Christos I. Giannikos: Baruch College and Graduate Center, City University of New York
Andreas Kakolyris: Kean University
Tin Shan Suen: Kean University

Journal of Economics and Finance, 2025, vol. 49, issue 1, No 2, 23-44

Abstract: Abstract This study identifies several factors that affect the demand for disability insurance (DI), such as wealth, health, financial literacy, and self-reported willingness to take financial risks, using a logit model and a random forest algorithm. While the role of risk aversion in insurance ownership is well established within theoretical insurance models, the empirical literature is still inconclusive. We provide evidence based on the Survey of Consumer Finances that willingness to take financial risks similar to wealth, health, and financial literacy is positively associated with the ownership of private DI. Furthermore, the literature has not explored multivariate risk attitudes in this framework. We thus employ indices of multivariate risk attitudes within a theoretical DI model. Our empirical results on private DI, in conjunction with the theoretical model we present, allow us to test hypotheses regarding multivariate household preferences and reject the hypothesis of correlation-neutral preferences on wealth and health.

Keywords: Disability Insurance; Risk Tolerance; Financial Literacy; Multivariate risk attitudes; Random forest algorithm; Underinsurance; Index of Cross-Prudence in Health (search for similar items in EconPapers)
JEL-codes: D14 G22 G41 G52 G53 I1 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s12197-024-09689-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:jecfin:v:49:y:2025:i:1:d:10.1007_s12197-024-09689-4

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-024-09689-4

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().