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Only words matter? The effects of cognitive abilities on commercial insurance participation

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Listed:
  • Zhang, Tingting
  • Li, Wenquan
  • Li, Kaixin
  • Liu, Zhifeng

Abstract

We examine the relationship between cognitive abilities and commercial insurance participation. Using data from the Chinese Family Panel Study, we find that average cognitive ability has a significantly positive impact on commercial insurance participation. However, this influence comes mainly from literacy ability, indicating that the literal meaning of the words plays a major role. Additionally, trust level can also affect the impacts of cognitive abilities on commercial insurance participation. Specifically, residents with lower trust levels are less likely to use their cognitive abilities to process information and make commercial insurance purchasing decisions. Moreover, we identify the supplementary effect of economic and managerial knowledge on cognitive abilities.

Suggested Citation

  • Zhang, Tingting & Li, Wenquan & Li, Kaixin & Liu, Zhifeng, 2022. "Only words matter? The effects of cognitive abilities on commercial insurance participation," The North American Journal of Economics and Finance, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:ecofin:v:61:y:2022:i:c:s1062940822000468
    DOI: 10.1016/j.najef.2022.101691
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    More about this item

    Keywords

    Cognitive ability; Insurance participation; Information; Trust;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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