Research on the impact of extended life expectancy on household risk asset allocation: Examining the moderating effects of human capital accumulation

Abstract

Human society is moving toward an era of longevity, health, and wealth. The level of human capital accumulation is an important factor influencing household investment portfolios, and the impact of increased life expectancy on human capital accumulation is becoming increasingly prominent. Based on the theoretical framework of the new dynamic life-cycle asset selection model, this study utilizes panel data from 31 OECD member countries spanning 2003 to 2017 to construct a dynamic panel model. The empirical analysis examines how life expectancy influences household allocations to risky assets, while further investigating the moderating effects of health and educational human capital in this relationship. The study finds that risk asset investment exhibits significant inertia, with current risk asset allocation depending on the proportion of investment in the previous period; increased life expectancy makes residents' investment decisions more cautious, reducing the proportion of risk assets in the portfolio; health human capital and educational human capital significantly increase the holding of risk assets, but the accumulation of human capital brought by increased life expectancy is insufficient to fully offset the cautious effect of life expectancy on risk asset investment. These findings have important practical implications for household investors and financial market development.