Research On The Frame Effect On The Insurance Demand In Medical Insurance Market

Behavioral finance has become a common theoretical tool to explain the anomaly of insurance demand in recent years,and it has been widely concerned.When individuals view insurance products,they generally analyze insurance utility from two perspectives: "Guarantee" and "Gain-Loss" : the insurance utility under the "guarantee frame" comes from the individual’s psychological comfort after hedging risks.Under the "gain-loss frame",individual insurance motivation comes from the uncertain returns and losses brought by risk.Those effect manifests differently at different reference points.The frame effect measures the relative weight of the “guaranteed utility” and “gain-loss utility” of the same insurance product.Therefore,using the related knowledge of insurance,actuarial mathematics and econometrics,this paper analyze the impact mechanism of personal frame effect on the demand for medical insurance under different reference points from the theoretical and empirical levels.First,this paper summarizes relevant theoretical models of insurance demand,including effective demand theory,Maslow’s hierarchy of needs,expected utility theory and prospect theory.Second,based on the dual perspective of insurance products,the expected utility model is established under the “guaranteed frame”,and the prospective theoretical model is established under the “gain-loss frame”.The relative sizes of the “guaranteed utility” and “gain-loss utility” are measured using the frame effect in High insurance rate model and low insurance rate model.Theoretical model analysis found that: under high insurance rate,because the "gain-loss utility" is positive,the size of the individual frame effect is positively related to the insurance willingness;at low insurance rate,due to the "gain-loss utility" is negative,the size of the individual frame effect is negatively related to the willingness to insure.Third,this article sorts out China’s medical insurance system.China’s medical insurance system is based on social medical insurance covering all groups of people,supplemented by commercial medical insurance.However,the significant differences between basic medical insurance and commercial insurance,such as Coverage,enforcement and availability,make differences in insurance demand.Based on the development of unit-linked insurance and positioning of commercial medical insurance,this paper analyzes the current situation of medical insurance demand under a single frame.Fourth,the paper conducts an empirical test.This article uses CHARLS China medical insurance related data to measure the "guarantee effectiveness" of individuals purchasing insurance products with personal assets,and use the medical experience,personal cognitive memory ability,and the proportion of risk assets to total assets to measure the size of individual frame effects.Based on willingness of social medical insurance and commercial medical insurance,I establish a Porbit model,and the empirical results show that the personal frame effect does have an influence on the willingness to insure.Finally,based on theories and empirical models,relevant suggestions are made for the development of China’s social medical insurance and commercial medical insurance markets,with a view to improving China’s medical insurance security system.In other words,reference policy recommendations is also provided for relevant policy departments.The innovation of this paper may lie in: based on the dual perspective of insurance and combining with the prospect theory and expected utility theory,the paper has established the theoretical model.and combined with the practical experience of the Chinese medical insurance market evidence,it prove the reference point dependence effect and the influence mechanism of framing effect under different reference point.