Effects of behavioral biases on life insurance demand decisions in Uganda

IF 1.9 Q2 ECONOMICS

INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS Pub Date : 2023-11-23 DOI:10.1108/ijse-03-2023-0201

Yusuf Katerega Ndawula, Neema Mori, Isaac Nkote

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Abstract

PurposeThis paper examines the relationship between behavioral biases, and demand decisions for life insurance products in Uganda.Design/methodology/approachData were collected from 351 life insurance policyholders in Uganda. The authors used a cross-sectional survey by applying a structured questionnaire. Descriptive analysis was conducted and hypothesized relationships between the constructs were evaluated through the use of structural equation modeling.FindingsResults indicate that, behavioral biases are significant predictors of life insurance demand among Ugandan policyholders. Also, the two behavioral bias variables (heuristic bias and prospect bias) are significant predictors of demand decisions for life insurance products.Practical implicationsThese results are helpful for both insurers and regulators. For insurers, it is now evident that demand decisions for life insurance products are not fully rational. It is imperative for insurers to simplify life insurance product information (heuristics), integrate product education and widen dissemination of product information (prospect bias) to allow policyholders to come up with optimal demand decisions. While for insurance policymakers, the study provides an understanding of behavioral biases. With such insights, policymakers can identify exploitative and deceptive information that target policyholders to better guide life insurance documentation and product designs.Originality/valueThis study is the first to offer insights into behavioral biases' influence on demand decisions for life insurance products in a developing country like Uganda. By integrating prospects and expected utility theory, this study examines rationality and irrationality in demand decisions for life insurance products.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2023-0201

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行为偏差对乌干达人寿保险需求决策的影响

目的本文研究了乌干达人寿保险产品的行为偏差与需求决策之间的关系。作者采用结构化问卷进行横截面调查。结果结果表明，行为偏差是乌干达投保人人寿保险需求的重要预测因素。此外，两个行为偏差变量（启发式偏差和前景偏差）对人寿保险产品的需求决策具有显著的预测作用。对于保险公司来说，现在很明显，人寿保险产品的需求决策并非完全理性。保险公司必须简化寿险产品信息（启发式），整合产品教育，扩大产品信息的传播范围（前景偏差），让投保人做出最佳的需求决策。对于保险政策制定者来说，这项研究提供了对行为偏差的理解。有了这样的认识，政策制定者就能识别针对投保人的剥削性和欺骗性信息，从而更好地指导人寿保险文件和产品设计。通过整合前景理论和预期效用理论，本研究探讨了人寿保险产品需求决策中的理性和非理性问题。同行评议本文的同行评议记录可在以下网址查阅：https://publons.com/publon/10.1108/IJSE-03-2023-0201。

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来源期刊

INTERNATIONAL JOURNAL OF SOCIAL ECONOMICS ECONOMICS-

CiteScore

3.20

自引率

5.30%

发文量

期刊介绍： The International Journal of Social Economics publishes original and peer-reviewed theoretical and empirical research in the field of social economics. Its focus is on the examination and analysis of the interaction between economic activity, individuals and communities. Social economics focuses on the relationship between social action and economies, and examines how social and ethical norms influence the behaviour of economic agents. It is inescapably normative and focuses on needs, rather than wants or preferences, and considers the wellbeing of individuals in communities: it accepts the possibility of a common good rather than conceiving of communities as merely aggregates of individual preferences and the problems of economics as coordinating those preferences. Therefore, contributions are invited which analyse and discuss well-being, welfare, the nature of the good society, governance and social policy, social and economic justice, social and individual economic motivation, and the associated normative and ethical implications of these as they express themselves in, for example, issues concerning the environment, labour and work, education, the role of families and women, inequality and poverty, health and human development.