Citation

Discussion Paper Details

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Title: Background Uncertainty and the Demand for Insurance Against Insurable Risks

Author(s): Luigi Guiso and Tullio Jappelli

Publication Date: June 1996

Keyword(s): Background Risk, Insurance and Prudence

Programme Area(s): International Macroeconomics

Abstract: Theory suggests that people facing higher uninsurable background risk buy more insurance against other risks that are insurable. This proposition is supported by Italian cross-sectional data. It is shown that the probability of purchasing casualty insurance increases with earnings uncertainty. This finding is consistent with consumer preferences being characterized by decreasing absolute prudence.

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Bibliographic Reference

Guiso, L and Jappelli, T. 1996. 'Background Uncertainty and the Demand for Insurance Against Insurable Risks'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1423