Insurance and portfolio decisions: Two sides of the same coin?

• 成果类型: Article
• 署名作者: Armantier, Olivier; Foncel, Jerome; Treich, Nicolas
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - New York; Universite de Lille; Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; INRAE
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2023.03.003
• 发表日期: 2023
• 页码: 201-219
• 关键词: PORTFOLIO DECISIONS; insurance; WEALTH

摘要

We study insurance and portfolio decisions, two opposite risk retention tradeoffs. Using household level data, we identify the first joint determinants (e.g. subjective expectations, risk attitude) and frictions (e.g. liquidity constraints, financial literacy) in the literature. We also find key differences between the two decisions. Notably, contrary to economic intuition, risky asset holding and insurance coverage both increase with wealth. We show that this apparent puzzle is driven in part by a specific behavioral pattern (the poor invest too conservatively, while the rich over-insure), and can be explained by two factors: regret avoidance and nonperformance risk.(c) 2023 Elsevier B.V. All rights reserved.