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ECONOMETRIC MODELING OF MICRO-ECONOMIC DEMAND FOR INSURANCE
Abstract
Traditionally, insurance purchasing behavior is associated with individual risk aversion. It is assumed that the risk attitudes are correlated with voluntary insurance consumption. We use the potential and realized risk attitudes along with socio-economic and demographic factors as determinants of insurance behavior of Russians. We present the results of modeling of the individual insurance behavior based on Individual Russia Longitudinal Monitoring Survey Higher School of Economics (RLMS-HSE) Round 25 data for 2016. It is showed that the higher propensity to voluntary insurance is demonstrated by individuals from wealthy households, at the age of 45-59 years; male; with completed higher education and higher; married; having small households; living in regional centers; non-Islamic or non-believers; satisfied with their lives. Their household had debts on loans, lent money or received income from the leasing of their property. We found that Russian women have smaller probability of holding insurance policy despite the fact that almost all empirical studies confirm that women are more risk averse than men. These results suggest that insurance is not considered by Russians as an actual way to avoid risk. Thus insurance behavior for Russians is the part of active financial strategy that is followed mostly by wealthy middle-aged men.
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