Economic Policy Uncertainty, Regional Insurance Purchasing Behaviour and Income Impact Mechanism: Evidence from China

Using quarterly data from 2007 to 2017 from 30 Chinese provinces, this study examines the impact of income correlated to the effect of economic policy uncertainty on insurance purchasing behaviour. The findings reveal that the increase in economic policy uncertainty has a positive effect on insurance purchasing behaviour controlling for the influence of income. Meanwhile, an increase in income weakens the impact of economic policy uncertainty on insurance purchasing behaviour, and income's negative impact on the effect of economic policy uncertainty on the growth of personal insurance behaviour is significantly greater than that of property insruance. These results once again demonstrate that insurance is an inferior good with decreasing absolute risk aversion.