Research on the impact and heterogeneity of housing on the allocation of financial assets of households: Evidence from China.

This paper investigates the impact of housing with both consumption and investment attributes on the risky financial asset allocation of households, constructs Probit and Tobit models using 2019 China Household Finance Survey (CHFS) data, and proceeds to the mediation effect test and heterogeneity analysis. Results indicate that owning only one house exhibits a crowding-out effect on the risky financial asset allocation of urban households, with the degree of risk preference as the mediating effect mechanism, while owning multiple houses exhibits an asset allocation effect. Housing borrowing other than bank loans inhibits urban households from making risky financial asset allocations. The effect of housing on risky financial asset allocation is heterogeneous by income, age, and region.

The Rising Importance of Stock-Linked Assets in the Black-White Wealth Gap.

Studies have examined the racial disparities in household characteristics, homeownership, and familial transfer as primary drivers of the Black-White wealth gap in the United States. This study assesses the importance of stock-linked assets in generating wealth inequality. As financial assets become a growing component of household portfolios, the Black-White wealth gap is increasingly associated with the racial disparity in stock-linked assets. Using data from the Survey of Consumer Finances and the Panel Study of Income Dynamics, this study shows that the contribution of stock-linked assets to the Black-White wealth gap has expanded in both absolute and relative terms, surpassing those of homeownership and business equity. Furthermore, a substantial disparity in financial wealth exists even for otherwise similar Black and White households. Although the disparity is larger among those with more economic resources, a gap remains among those with less. Lastly, our analysis shows that the combination of lower ownership levels and lower returns on financial wealth among Black households could account for a quarter of the Black-White wealth accumulation gap, net of differences in current net worth and household characteristics. Our findings suggest that considering financial assets is critical for understanding contemporary racial wealth inequality.

COVID-19 vaccination and household savings: An economic recovery channel.

The COVID-19 pandemic increased people's propensity for precautionary savings in response to economic recession (e.g., Mody et al., 2012; Gropp and McShane, 2021; Levine et al., 2021). However, as the relevant vaccine roll-out continues, it mitigates people's concerns and boosts the macroeconomy, which leads to significant declines in household precautionary saving motives. Consistent with this expectation, using U.S. county-level vaccination, deposit, economic, and demographic data, we show that there is a significant negative relationship between COVID-19 vaccination and household savings. We attribute this negative relationship to an economic recovery channel because our findings also suggest that the vaccination has a strong negative impact on the unemployment rate and results in increases in consumer spending. Overall, our study adds to an emerging strand of literature on how COVID-19 vaccination affects households' financial behaviors.

The Impact of Financial Literacy on Household Health Investment: Empirical Evidence from China.

Based on the 2019 China Household Finance Survey (CHFS) data, this paper used factor analysis to measure the level of financial literacy of surveyed householders and used the Probit model and the negative binomial model to test the impact of financial literacy (FL) on household health investment (HHI). The results show that: (1) FL is an essential influencing factor in increasing participation in HHI, and householders with a higher level of FL are also more willing to pay for diversified investments. (2) We split the FL level from the two dimensions of knowledge and ability. We found that the primary FL (including financial knowledge, computing ability, and correct recognition of investment product risk) plays a more critical role in the investment decision process. (3) When information sources, health knowledge, and family income are used as mediating variables, FL can influence the decisions of HHI in three ways: expanding information sources, enriching health knowledge, and alleviating income constraints. (4) By analyzing the heterogeneity of household heads in different regions and with different personal characteristics, we found that the medical level of the household location and the life and work experience of the householders played a moderating role.

Identifying household finance heterogeneity via deep clustering.

Households are becoming increasingly heterogeneous. While previous studies have revealed many important insights (e.g., wealth effect, income effect), they could only incorporate two or three variables at a time. However, in order to have a more detailed understanding of complex household heterogeneity, more variables should be considered simultaneously. In this study, we argue that advanced clustering techniques can be useful for investigating high-dimensional household heterogeneity. A deep learning-based clustering method is used to effectively handle the high-dimensional balance sheet data of approximately 50,000 households. The employment of appropriate dimension-reduction techniques is the key to incorporate the full joint distribution of high-dimensional data in the clustering step. Our study suggests that various variables should be used together to explain household heterogeneity. Asset variables are found to be crucial for understanding heterogeneity within wealthy households, while debt variables are more important for those households that are not wealthy. In addition, relationships with sociodemographic variables (e.g., age, education, and family size) were further analyzed. Although clusters are found only based on financial variables, they are shown to be closely related to most sociodemographic variables.

Association of Financial Literacy and Risk Preference With Fraud Exposure and Victimization Among Middle-Aged and Older Adults in China.

Fraud jeopardizes older people's physical, mental, and economic well-being, and financial literacy and risk preference have been linked to the risk of fraud experience. Given the inconsistent evidence, we investigated whether financial literacy and risk preferences were associated with fraud exposure and victimization among middle-aged and older adults. We analyzed data from the 2015 China Household Finance Survey, including 22,121 participants aged 50 and older. Poisson regression models were conducted to determine the association of financial literacy and risk preference with fraud experience. We found that financial literacy and risk preference were positively associated with fraud exposure and victimization. The prevalence of fraud victimization among middle-aged and older adults with the highest financial literacy and risk preference levels was 46.5% and 45.8% higher than among those with the lowest levels, respectively. These findings suggested that basic financial knowledge is insufficient to protect older people from fraud exposure and victimization.

Medical insurance, health risks, and household financial asset allocation: evidence from China household finance survey.

There is a lack of micro evidence on whether medical insurance may optimize the household financial asset allocation by transferring health risk, despite the fact that health risk is a significant component driving families' precautionary savings. This article empirically examines the impact of health risk and social medical insurance on household risky financial asset allocation using a Probit model, based on data from the 2015-2019 China Household Finance Survey (CHFS). The findings indicate that social medical insurance, with its lower level of security, reduces the likelihood, but it can alter households' preferences for risk by lowering marginal effect of health risk. According to the findings of the heterogeneity analysis, people who live in rural and less developed areas are more likely to experience the risk-inhibiting effects of social medical insurance and health risk. The eroding and risk-suppressing impacts of social medical insurance are likewise less pronounced for households headed by women and older people, as is the health risk's suppressive influence on household involvement in risky financial markets. Compared with social medical insurance, commercial medical insurance with a higher level of coverage can dramatically increase household participation in riskier financial markets. This article provides micro-empirical evidence for the household asset allocation effect of medical insurance.

Effects of haze pollution and institutional environment on demand for commercial health insurance.

What countermeasures should the public take as they become aware of the dangers of haze pollution? Insurance has the function of risk diversification, and little existing literature has focused on the relationship between haze pollution and commercial health insurance. This paper analyzes the impact of haze pollution on residents' demand for commercial health insurance and the heterogeneous impact of institutional environment using the 2017 China Household Finance Survey cross-sectional data (CHFS). The study finds that haze pollution raises residents' demand for commercial health insurance as their health risk perception level rises. The legal environment, market environment, and traditional culture affect the relationship between haze pollution and the demand for commercial health insurance. Further analysis reveals that the relationship between haze pollution and residents' demand for commercial health insurance can show significant regional heterogeneity, with a significant positive correlation in the eastern region and a significant negative correlation in the central and western regions. In addition, the preventive behaviors adopted by residents in the face of haze pollution can vary significantly depending on individual risk preferences. The findings of this paper are important for the public to take measures to cope with the haze pollution hazards. At the same time, insurance companies should improve their services to meet the needs of the public regarding haze pollution, which will contribute to the healthy development of the insurance industry.

Private Health Insurance and Financial Risk Taking in Spain-The Moderating Effect of Subjective Risk Tolerance.

This study focuses on the effect of private health insurance on financial risk taking in Spanish households. According to the arguments related to the background risk, we propose two hypotheses: the first predicts a positive relationship between health insurance and risk taking and the second asserts that attitude to risk moderates this relationship. Spain is a good laboratory because it has a National Health System (NHS) that offers healthcare coverage to the entire population, which could eliminate the effect of health insurance on risk taking. Based on a sample of 6110 households obtained from the Household Finance Survey (EFF), our results confirm both hypotheses. Specifically, we show that private health insurance significantly increases a household's portfolio risk, especially in households with greater risk aversion. The results are concordant with the scarce amount of previous empirical evidence obtained in other contexts and are robust for different subsamples and estimation methods.

Risk attitudes and household consumption behavior: Evidence from China.

Risk attitude is a vital component of public mental health. Thus, the public should be guided to fully comprehend risks to improve public mental health. Using panel data from China Household Finance Survey (CHFS) in 2017, this study examined the impact of risk attitudes on household consumption behavior by constructing a micro-econometric model. Results suggest that risk attitude can promote household consumption, with multiple robustness tests supporting this conclusion. In addition, after dividing the consumption types into subsistence consumption, development consumption, and enjoyment consumption, we show risk preference promotes all three types of consumption and has the greatest impact on enjoyment consumption. Concurrently, risk neutrality can promote household survival consumption, but its promotion effect is smaller than that of risk preference. Moreover, risk aversion has an inhibitory effect on total consumption behavior, but this inhibitory effect does not show heterogeneity for different consumption behaviors. Heterogeneity analysis found that for male households, risk attitude remains an important factor in consumption behavior. When men's risk attitude is more risk averse, it can promote more survival consumption, whereas women's risk attitude is more risk averse. With increasing age, risk attitude remains a crucial factor in the occurrence of consumer behavior. However, education level has no bearing on the effect of risk attitude on household consumption behavior. This research holds theoretical and practical significance for improving public mental health, optimizing residents' consumption structure, and achieving high-quality economic development.

Health insurance, medical debt, and financial well-being.

We study the financial protection provided by health insurance through two natural experiments-the Affordable Care Act's under 26 provision and Medicare eligibility. In both cases, the coverage expansion sharply reduces medical debt in collections for consumers within the affected ages but does not systematically improve credit outcomes not directly related to medical care. This is consistent with the infrequent repayment rate and lack of persistence on credit reports that we document for medical collections, which mute a key channel through which reductions in medical collections could directly affect the other financial outcomes studied here. These results help clarify the role of health insurance in broader financial health and suggest that, at least among the populations studied here, medical debts in collection may often be a symptom rather than a cause of wider financial distress as measured on credit reports.

Living with Reduced Income: An Analysis of Household Financial Vulnerability Under COVID-19.

The COVID-19 crisis has led to substantial reductions in earnings. We propose a new measure of financial vulnerability, computable through survey data, to determine whether households can withstand a certain income shock for a defined period of time. Using data from the ECB Household Finance and Consumption Survey (HFCS) we analyse financial vulnerability in seven EU countries. We find that, out of the 243 million individuals considered, 47 million are vulnerable to a three month long income shock (the average length of the first wave COVID-19 lockdown), i.e., they cannot afford food and housing expenses for three months without privately earned income. Differences across countries are stark. Individuals born outside the EU are especially likely to be vulnerable. Being younger, a single parent, and a woman are also statistically significant risk factors. Through a tax-benefit microsimulation exercise, we look into the COVID-19 employment protection benefits, the largest income support measure in the countries considered. Considering as our sample individuals in households where someone receives a salary, we derive household net income when employees are laid-off and awarded the COVID-19 employment protection benefits enacted. Our findings suggest that the employment protection schemes are extremely effective in reducing the number of vulnerable individuals. The relative importance of rent and mortgage suspensions, (likewise, widespread COVID-19 policies), in alleviating vulnerability, is highly country dependent.

"Mortgage renegotiation, monetary gains and financial literacy: A dataset of Chilean households".

This article provides data on the Mortgage Renegotiation behavior of a sample of Chilean households, plus estimates of the Present Value of the gains of mortgage refinancing and the number of past months in which it was optimal to make a refinancing choice. Furthermore, I impute the value of the Financial Literacy index of each household, according to the OCDE-INFE methodology. This data is useful for academics, policy makers and business analysts interested in the relationship between mortgage refinancing and financial literacy.

Fuel poverty and financial distress.

Governments and advocacy groups have drawn attention to the precarious position of those members of society who are unable to attain an adequate level of energy services, i.e. the fuel poor. Concerns have also arisen about the ability of fuel poor individuals to adapt to the hardship recently brought about by the COVID-19 pandemic. This paper contributes to the literature by exploring empirically the link between fuel poverty and financial distress prior to and during the first wave the COVID-19 pandemic. The analysis is based on the most recent longitudinal, nationally representative survey of the United Kingdom, Understanding Society (UKHLS, Wave 10, January 2018-February 2020). After correcting for the effects of potential endogeneity in the variables of interest, our results identify a statistically robust relationship between fuel poverty indicators and self-reported measures of current financial distress, with stronger effects for subjective indicators. The fuel poverty indicators however exert only a limited influence on an individual's expectation of their future financial situation. Our analysis of the first wave of the COVID-19 pandemic also confirms that fuel poverty contributed to financial distress. Our main findings are robust to a suite of specification and sensitivity checks. Our results lead to recommend assessing measures which target fuel poverty on the basis of their potential indirect effect on financial distress.

The stock market as a casino: Associations between stock market trading frequency and problem gambling.

BACKGROUND AND AIMS: Personal investors decrease their stock market investment returns by trading frequently, which the behavioral finance literature has primarily explained via investors' overconfidence and low levels of financial literacy. This study investigates whether problem gambling can help account for frequent trading in a sample of active gambler/investors, as suggestive of frequent trading being in part driven by a behavioral addiction to gambling-like activities. METHODS: A retrospective cross-sectional study of 795 US-based participants, who reported both being active gamblers and holding stock market investments. Recollected stock trading activity (typical portfolio size, purchases and sales of stocks) was compared with scores on the Problem Gambling Severity Index, a financial literacy scale, and a measure of overconfidence. RESULTS: Self-reported relative stock portfolio turnover was positively associated with problem gambling scores. This association was robust to controls for financial literacy, overconfidence, and demographics, and occurred equally among investors of all self-reported portfolio sizes. DISCUSSION AND CONCLUSIONS: This study provides support for the hypothesis that behavioral addiction to gambling-like activities is associated with frequent stock market trading. New investment products that increase the ease of trading may therefore be detrimental to some investors.

The Impact of Medical Insurance on Household Stock Market Participation: Evidence From China Household Finance Survey.

This paper explores the impact of medical insurance on the possibility of household participation in the stock market and the portfolio share of equity, applying Probit, and Tobit models with the data from China Household Finance Survey (CHFS). The empirical results highlight that participating in medical insurance can significantly increase the possibility of households participating in the stock market and the portfolio share of equity, and have passed the robustness tests, including propensity score matching (PSM), altering estimation methods, replacing explained variables, and eliminating samples. Besides, heterogeneity analysis shows that the impact of medical insurance on household stock market participation is more significant in eastern region, urban areas, and households with higher income level. Further mechanism analysis implies that household participation in medical insurance mainly affects their stock market participation through preventive savings effect. It is necessary to improve the medical insurance system and encourage household participation in stock market so as to further promote financial development in China.

The performance of retail investors, trading intensity and time in the market: evidence from an emerging stock market.

We analyze all stock transactions executed by the universe of individual (or retail) investors of the Colombian Stock Exchange (5,380,810 trades performed by 42,211 individual investors between 2006 and 2016). Retail investors had negative abnormal returns on a gross excess return basis that ranged between 4% and 4.4% per year (depending on whether the alpha was estimated using the CAPM, Fama-French model or Carhart model). When transaction costs are considered, the underperformance of retail investors becomes even more pronounced, and the most active traders perform worse than less active traders even on a gross excess return basis. The underperformance of retail investors can be explained by their bad timing but only prior to the bankruptcy of Interbolsa, the largest stock brokerage house in Colombia at the time (2012). Once we control for the number of trades and other variables, we find that retail investors present in the market for a longer period of time and trading more actively outperform the other investors (on both a gross and net basis).

Household financial vulnerability in Indonesia: Measurement and determinants.

This study assesses the level of financial vulnerability of Indonesian households using data from the Household's Balance Sheet Survey (Survei Neraca Rumah Tangga/SNRT) 2016 and 2017. The SNRT are micro-unit of household data that contains information on preferences and behavior. Through both objective and subjective measurements of the Household Financial Vulnerability Index (FVI), we find that the financial vulnerability of Indonesian households is not only strongly influenced by income factors, but also by finance-related behavioral characteristics and several socio-economic factors. As a consistency and robustness check, we also estimate econometric models using the Indonesian Family Life Survey (IFLS) panel data for the periods 1993, 1997, 2000, 2007 and 2014. Our study then conclude that the level of household financial vulnerability decreased in 2017. Moreover, the study suggests that we should carefully monitor the behaviour of middle income group as they contribute significantly to the household financial vulnerability in Indonesia.

Relaxing household liquidity constraints through social security.

More than a quarter of working-age households in the United States do not have sufficient savings to cover their expenditures after a month of unemployment. Recent proposals suggest giving workers early access to a small portion of their future Social Security benefits to finance their consumption during the COVID-19 pandemic. We empirically analyze their impact. Relying on data from the Survey of Consumer Finances, we build a measure of households' expected time to cash shortfall based on the incidence of COVID-induced unemployment. We show that access to 1% of future benefits allows 75% of households to maintain their current consumption for three months in case of unemployment. We then compare the efficacy of access to Social Security benefits to already legislated approaches, including early access to retirement accounts, stimulus relief checks, and expanded unemployment insurance.

Helicopter money in Europe: New evidence on the marginal propensity to consume across European households.

The recent spread of COVID-19 has led to the worst economic crisis since the 1930s. To boost demand after the crisis, direct monetary transfers to households are being discussed. Using novel microdata from the Eurosystem Household Finance and Consumption Survey (HFCS), we study how much of such a transfer households would actually spend. We do so by exploiting the unique opportunity that the new wave of the survey included an experimental question to calculate the marginal propensity to consume from hypothetical windfall gains. Our results show that households on average spend between about 33% (the Netherlands) and 57% (Lithuania) of such a transfer. In all countries, answers are clustered at spending nothing, spending 50% and spending everything. Marginal propensities to consume decrease with income but are not as clearly related to wealth.