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Title:Sociodemographic, economic, and psychological drivers of the demand for life insurance: Evidence from the German Retirement Income Act PDF Logo
Authors:Hecht, Carolin
Hanewald, Katja
Issue Date:2010
Series/Report no.:SFB 649 discussion paper 2010-034
Abstract:We exploit the natural experiment of the 2005 income tax reform in Germany to study the effects of tax incentives on consumer behavior in life insurance markets. Our empirical analysis of sociodemographic, economic, and psychological household characteristics elicited in the German SAVE study shows that two very different consumer groups buy (endowment) life insurance before and after the tax reform. We find that education plays a central role in reactions to the modified tax environment. Our stylized characterization of 'arbitrageur' and 'straggler' buyers will assist both life insurance firms and regulatory authorities design effective policies.
Subjects:life insurance demand
tax incentives
financial literacy
JEL:D12
D14
D91
G22
K34
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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