Background Uncertainty and the Demand for Insurance Against Insurable Risks

Luigi Guiso and Tullio Jappelli ()

No 1423, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Theory suggests that people facing higher uninsurable background risk buy more insurance against other risks that are insurable. This proposition is supported by Italian cross-sectional data. It is shown that the probability of purchasing casualty insurance increases with earnings uncertainty. This finding is consistent with consumer preferences being characterized by decreasing absolute prudence.

Keywords: Background Risk; Insurance; Prudence (search for similar items in EconPapers)
JEL-codes: D81 (search for similar items in EconPapers)
Date: 1996-06
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Background Uncertainty and the Demand for Insurance Against Insurable Risks (1998)
Working Paper: Background Uuncertainty and the Demand for Insurance against Insurable Risks (1998)
Working Paper: Background UNcertainty and the Demand for Insurance Against Insurable Risks (1996)
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