Cognitive abilities and life insurance holdings: evidence from 16 European countries

Mind the Gap – Assessing the Size and Determinants of the Life Insurance Gap

“…We limit the examination to persons whose households have no more than two adults, because otherwise it is not possible to deduce the spouse's information very precisely with the available data.31 Calculation of optimal life insurance holdings would require building a stochastic life cycle model with family structure specific preferences(Hong and Rios-Rull 2012) and income and mortality uncertainties(Chambers et al 2011). More complications would arise, if the model is designed to consider the differences in risk aversion(Outreville 2014), cognitive abilities(Li et al 2022) and cognitive biases(Coe et al 2016). …”