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Do emotions affect insurance demand?

Author

Listed:
  • Gianni Brighetti
  • Caterina Lucarelli
  • Nicoletta Marinelli

Abstract

Purpose - – The purpose of this paper is to explore how psychological variables are related to real-life insurance consumption. Specifically, the authors focus on whether emotions and psychological traits can improve the predictability of insurance demand, taking traditional socioeconomic variables under control. Design/methodology/approach - – The approach used was in-person survey, based on a traditional questionnaire, the Barratt Impulsiveness Scale and a psycho-physiological task (Iowa Gambling Task (IGT)). Findings - – A selective role of emotions and psychological traits has been proven to exist when comparing different insurance policies. Life and casualty insurance are affected by emotional arousal to losses; indemnity insurance by fear of the unknown, whereas health insurance by impulsivity. Research limitations/implications - – The findings indicate that individual insurance consumption may be amplified by not cognitive components. Future research should concentrate on testing the effect of further psychological traits related to pure risk coverage. Practical implications - – The results may be of interest for insurers in order to know what drives insurance demand with respect to different kinds of pure risks. Social implications - – For policymakers, it is important to understand how psychological factors affect consumer behavior in order to incorporate such perspective into modern insurance policy measures. An analysis of such factors may also increase the self-consciousness of insurance consumers and enrich consumer self-protection. Originality/value - – The authors propose an interdisciplinary approach to analyze insurance demand and test different kinds of insurance coverage, suggesting not homogenous hedging behaviors in relation to specific ambiguous events.

Suggested Citation

  • Gianni Brighetti & Caterina Lucarelli & Nicoletta Marinelli, 2014. "Do emotions affect insurance demand?," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 6(2), pages 136-154, November.
  • Handle: RePEc:eme:rbfpps:v:6:y:2014:i:2:p:136-154
    DOI: 10.1108/RBF-04-2014-0027
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    Citations

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    Cited by:

    1. Goodell, John W. & Kumar, Satish & Rao, Purnima & Verma, Shubhangi, 2023. "Emotions and stock market anomalies: A systematic review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    2. Richard J. Butler, 2021. "Information access and homeowners insurance purchases," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 46(4), pages 649-663, October.

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