As Insured As Religion:How Religion Affiliation Affects Consumption Of Life Insurance

This study aims to investigate the role of religion in determining the purchase of life insurance.Recent literature has shown that religion is closely associated with risk aversion and almost 80 percent of people around the world still affiliate with religion.We,therefore,hypothesize that religion affects people‘s risk preferences,resulting in different levels of life insurance consumption across religions.Drawing on a sample of 142 countries with data over the past 20 years,multiple regression analysis is used to examine the effect of religion while other traditional determinants are taken as control variables.The results reveal that,in general,religion is negatively correlated with consumption of life insurance.After digging deeper,we find that Catholic,Orthodox and Islam(both Sunni and Shia)are negatively correlated with consumption of life insurance.Only Protestant shows a positive relationship,while the effect of Buddhism is insignificant.The empirical results support our hypothesis that religion plays a crucial role in determining the level of life insurance consumption across religions.However,although religion is associated with risk aversion,our results shows that only Protestant are free to express risk-averse preferences and open for market-based products(conventional life insurance)against mortality risk.Risk preferences of Catholic,Orthodox and Islam are intervened to rely on God‘s protection or on ethic-based products(unconventional forms of insurance),resulting in negative relationship with the conventional one used in this study.Buddhism is insignificant since it focuses more on the ?no-self‘ discipline,seeking to minimize suffering rather than to maximize death benefits.The results are robust to control for endogeneity concerns.There are also mechanisms behind religion that shapes consumer behavior,such as risk avoidance,future orientation and mortality rate.Overall,religion is theoretically related to risk aversion.However,in practice,the decision to buy(or not to buy)life insurance depends much on religious institutions,what attitude they take: liberal,conservative,or neutral.