The effect of health shocks on life insurance consumption and economic growth in developed and developing countries

Mousavi, M.; Khezri, A.

doi:10.22056/ijir.2020.04.01

Document Type : Original Research Paper

Authors

Department of Economics, Faculty of Social and Economic Sciences, Al-Zahra University, Tehran, Iran

https://doi.org/10.22056/ijir.2020.04.01

Abstract

Objective: Health shocks have economic costs, including an increase in health expenses due to diseases and a decrease in income due to a decrease in the productivity of the workforce. The increase in these two costs causes information asymmetry, which in turn causes a disruption in the natural mechanism of prices in the insurance market and creates Economic effects increase. Therefore, health shocks create functional linkages between national income and insurance markets. Since life insurance is one of the most important branches in the insurance industry, whose growth and development can make a significant contribution to the improvement and growth of the economic situation of countries, the purpose of this study is to investigate the effects of health shocks on the insurance market and economic growth over a period of time. 2000 to 2017.
Methodology: In order to investigate the effect of health shocks on insurance consumption and economic growth, first, positive and negative health shocks were extracted using Mork's rule, and then their effect on economic growth and life insurance consumption was examined in the framework of panel data autoregression (PVAR). It placed.
Findings: The results of the reaction function showed that due to the low life expectancy and public health level in developing countries compared to developed countries, public spending has higher efficiency, so positive health shocks have accelerated economic growth. Also, regarding the response of life insurance consumption to health shocks, each additional dollar of health expenditure in developed countries was weaker than in developing countries. The results of variance analysis showed that most of the long-term economic growth fluctuations are explained by negative health shocks. The variance analysis of life insurance consumption also showed that after the negative health shock variable itself, they were the most explanatory for life insurance consumption fluctuations. The results of the Granger causality test also showed the causality relationship from health shocks to life insurance consumption and economic growth.
Conclusion: The government and insurances play an important and strategic role in promoting health and economic growth. Therefore, any reduction in government resources and insurances will lead to an increase in people's out-of-pocket payments, this is in the case that government spending in the health sector leads to the highest social productivity and in addition to reducing the pain and worries of the people - especially the disadvantaged - in terms of A strategy also achieves minimal public satisfaction.

Keywords

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Iranian Journal of Insurance Research

The effect of health shocks on life insurance consumption and economic growth in developed and developing countries

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Letters to Editor

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Volume 9, Issue 4 - Serial Number 34
October 2020
Pages 370-386

The effect of health shocks on life insurance consumption and economic growth in developed and developing countries

References

References

Letters to Editor

Send comment about this article

Volume 9, Issue 4 - Serial Number 34October 2020Pages 370-386

Volume 9, Issue 4 - Serial Number 34
October 2020
Pages 370-386