Page 121 - IJPS-11-5

International Journal of
Population Studies Endowment insurance and family consumption in China

Table 15. Results of placebo test after excluding control variables
Age range
±1 ±2 ±3 ±4
Impact of age >60 on receiving pension 0.463*** (0.032) 0.576*** (0.022) 0.632*** (0.018) 0.666*** (0.015)
Impact of receiving pension on household consumption −0.467*** (0.149) −0.429*** (0.088) −0.343*** (0.067) −0.330*** (0.056)
Sample size 972 1626 2224 2834
Notes: *p<0.1; **p<0.05; ***p<0.01.

the importance of perceived value in shaping consumer
attitudes and consumption behavior (Thaler, 1991).

Moreover, the effects of pension receipt are not
uniform across different demographic groups or regions.
For instance, rural households may experience a more
pronounced increase in consumption from pensions due
to their relatively lower baseline economic resources.
This disparity can be explained by the Relative Income
Hypothesis, which suggests that individuals’ consumption
decisions are influenced by their income relative to others
within their community (Yi et al., 2008). In less affluent
areas, the additional pension income can lead to more
significant changes in consumption behavior as families
prioritize immediate needs.

In addition to these immediate shifts, the transformative
Figure 3. Density function of grouping variables
effects of endowment insurance can be observed across
decisions not solely on current income but also on several broader dimensions. First, endowment insurance
expectations of lifetime income. Households with pension contributes to a fundamental shift in household financial
plans view future benefits as integral components of strategies. By providing a predictable future income stream,
their financial portfolios, prompting them to adjust their it alleviates households’ need for precautionary savings,
consumption patterns accordingly. which are traditionally driven by uncertainty about future
Further analysis reveals the complex mechanisms that income. As a result, households may increase their current
underlie household consumption patterns across different consumption, particularly in discretionary areas such as
pension schemes. Government endowment insurance entertainment and leisure, which have historically been
emerges as a prominent driver of increased consumption, constrained by concerns over future financial insecurity
suggesting that the predictability and stability of such (Feldstein, 1974; Hubbard et al., 1995). This shift marks a
benefits encourage discretionary spending (Blake, 2003). In crucial change in household financial planning, allowing
contrast, the limited or even negative impact of commercial for greater current spending and investment in immediate
insurance raises concerns regarding its perceived value. needs.
This reflects consumer confidence theories, which contend The long-term impact of endowment insurance on
that households may regard commercial insurance as household welfare is also noteworthy. Over time, as
less reliable, thereby leading to hesitancy in altering individuals accumulate pension entitlements, they may
consumption behavior (Barro & MacDonald, 1979). increasingly prioritize current consumption, thus altering
The varying effects of different pension schemes— their life-cycle consumption patterns. This shift is particularly
particularly the strong influence of institutional transformative for households that previously lacked access
endowment insurance compared to the limited or to reliable savings vehicles or government-provided safety
negative effects of commercial insurance—highlight the nets (Modigliani & Brumberg, 1954). The availability of
critical role of consumer confidence. Households tend stable, predictable income not only supports increased
to perceive institutional pensions as more reliable due to consumption in the present but also enhances long-term
their government backing and predictability. In contrast, financial security. As households gain confidence in their
commercial insurance products may be perceived as financial future, they are able to make better decisions, plan
riskier or less beneficial, a discrepancy that underscores more effectively, and invest in their overall welfare.

Volume 11 Issue 5 (2025) 115 https://doi.org/10.36922/ijps.4857