The Effects of Famine Experience on Individual's Insurance Demand-Empirical Research using Data from China Family Panel Studies

Do individual's early experiences affect their insurance demands? China's 1959-1961 Great Famine provides a natural experiment to study this issue. This paper, using data from 2010 China Family Panel Studies (CFPS), examines the effect of individual's early famine experience on their insurance demand. The empirical results show that famine experiences do affect the family's insurance decision after controlling factors such as family's economic status, demographic characteristics, and social relationship: the more seriously one suffered from the famine, the higher the demand for insurance is; being adults when facing the famine has significant effect on the insurance decision. These results are robust to alternative measures of the famine severity, the Difference-in-Difference method, and the possible effects of immigration population.