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Life Insurance and Suicide: Asymmetric Information Revisited

Author

Listed:
  • Choi Yun Jeong

    (School of Economics, Yonsei University, 50 Yonsei-Ro, Seoul, Republic of Korea)

  • Chen Joe

    (Department of Public Finance, National Chengchi University, Taipei, Taiwan, Republic of China)

  • Sawada Yasuyuki

    (Faculty of Economics, University of Tokyo, Tokyo, Japan)

Abstract

This paper investigates the nexus between life insurance and suicide behavior by applying semiparametric instrumental variable regressions to OECD cross-country data from 1980 to 2002. The novelty of our analysis lies in the use of cross-country variations in the lengths of the suicide exemption period in policies and foreign market shares in life insurance industries as identifying instruments for life insurance demand. We find that, for the majority of observations, there exists a positive causality from life insurance demand to suicide. This result suggests the existence of adverse selection and moral hazards in life insurance markets in OECD countries.

Suggested Citation

  • Choi Yun Jeong & Chen Joe & Sawada Yasuyuki, 2015. "Life Insurance and Suicide: Asymmetric Information Revisited," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1127-1149, July.
    • Handle: RePEc:bpj:bejeap:v:15:y:2015:i:3:p:1127-1149:n:10
    DOI: 10.1515/bejeap-2014-0081
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    References listed on IDEAS

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    Cited by:

    1. Joe Chen & Shih-Chang Huang, 2020. "Suicide, Aging, and Permanent Income: A Social Norms Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(3), pages 867-885, August.

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