Motality Shock,Household financial Fragile and Risk Aversion
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| Title | Motality Shock,Household financial Fragile and Risk Aversion
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| Author | Zhang ji,Zhu Wei and Wang Yake |
| Organization | University of international Business and Economics |
| Email | zhangji1030@ 126.com |
| Key Words | mortality risk; household consumption and welfare; household economic vulnerability; Risk aversion |
| Abstract | Based on the expected utility theory, this paper constructs a new household economic vulnerability analysis framework to study the impact of mortality risk on the residents' consumption and welfare.We separate the effect of mortality risk on the residents' consumption into two parts: decline level and fluctuations level according to the heads’ and spouses' cross term effects,which can provide the basis for the family to take a reasonable way to avoid mortality risk. Our results show that: The household economic vulnerability is common and serious in the urban residents in China. The families whose economic vulnerability caused by the death is above 20% accounted for more than 65% of the families of all the sample households . The effect of volatility of household consumption level was significantly higher than that of consumption decline level,which means using insurance to avoid the risk of death is more effective than saving. At present, the overall life insurance that urban residents held is not sufficient, but life insurance protection can match well with and the household economic vulnerability.In addition, the effective degree of life insurance reducing the economic vulnerability is heterogeneous:the most effective for the family of 3 and 35-44 years old but not good for female head. It is proved that the framework of this paper can effectively measure the impact of mortality risk on household consumption and welfare, but also can directly answer how to choose risk aversion mode and provide reference for policy making. |
| Serial Number | WP1022 |
| Time | 2016-02-02 |
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