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Risk communication clarity and insurance demand: The case of the COVID-19 pandemic

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  • Feng, Jingbing
  • Xu, Xian
  • Zou, Hong

Abstract

We study how the clarity of COVID-19 risk communications affects COVID-19 insurance demand using proprietary prefecture-level insurance data from China. We find that when local disclosures of COVID-19 risk contain case origin information, local purchases of COVID-19 insurance and local Internet searches for COVID-19 information increase, even after controlling for newly confirmed local cases and new deaths. Our results are robust to using the disclosure clarity of a major neighboring city. The findings suggest that providing improved knowledge about risk to individuals lead them to engage in more risk management. Our evidence contributes to the debate over how risk communication affects individuals’ risk-related behaviors.

Suggested Citation

  • Feng, Jingbing & Xu, Xian & Zou, Hong, 2023. "Risk communication clarity and insurance demand: The case of the COVID-19 pandemic," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:dyncon:v:146:y:2023:i:c:s0165188922002652
    DOI: 10.1016/j.jedc.2022.104562
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    More about this item

    Keywords

    Risk information; Information ambiguity; Risk salience; Insurance demand; COVID-19;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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