Estimating Spillover Effects in Property Casualty Insurance Consumption

49 Pages Posted: 4 Jun 2020 Last revised: 12 Apr 2021

See all articles by Douglas Bujakowski

Douglas Bujakowski

Drake University; Drake University - College of Business and Public Administration

Shinichi Kamiya

Nanyang Business School, Nanyang Technological University

Date Written: May 6, 2020

Abstract

The determinants of insurance consumption have been extensively studied, yet spatial correlations are rarely considered within this framework. In this paper, we discuss several channels through which spatial dependence may arise and then test for spatial dependence using six years (2009-2014) of province-level data from China. Results suggest that spatial spillover effects are large and have the potential to seriously bias marginal effect estimates if neglected. Specifically, when regions experience similar changes in determinants, marginal effect estimates in spatial models are roughly 1.5 times that implied by aspatial models. Moreover, the findings of this study demonstrate that properly modeling spatial dependence is of paramount importance in accurately assessing the impact of insurance consumption determinants.

Keywords: Spatial model, Insurance consumption, Spillover effect, China

JEL Classification: G01, G22, E22

Suggested Citation

Bujakowski, Douglas and Kamiya, Shinichi, Estimating Spillover Effects in Property Casualty Insurance Consumption (May 6, 2020). Nanyang Business School Research Paper No. 20-10, Available at SSRN: https://ssrn.com/abstract=3594910 or http://dx.doi.org/10.2139/ssrn.3594910

Douglas Bujakowski (Contact Author)

Drake University ( email )

2507 University Ave.
Des Moines, IA 50311
United States

Drake University - College of Business and Public Administration ( email )

2507 University Avenue
Des Moines, IA 50311-4505
United States

Shinichi Kamiya

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

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