| Along with the development of financial markets,the investment choices of households have increased substantially.At present,the portfolio choice of Chinese households is featured by limited participation,regional imbalance and household heterogeneity.Explaining the characteristics and their factors of household portfolio choice has become the focus of academic research as well as policymakers.The portfolio choice is closely related to residents’property income,households’ financial vulnerability and the level of social welfare.On the one hand,a reasonable allocation of assets is an important way for households to obtain property income,which can improve their risk-tolerance.On the other hand,driven by the multiplier effect,improvements in the portfolio choice of a single household have the potential to generate large economic gains for society.A thorough study of household portfolio choice can help to analyze the welfare effects of financial policy adjustment and improve the efficiency of financial markets.Over the years,unprecedented increases in life expectancy and aggravating trend of aging population have raised important concerns for longevity risk.Focusing on the portfolio choice decision in the field of household finance,this paper conducts theoretical and empirical studies on the impact of longevity risk on household portfolio choice.Meanwhile,this paper explores the micro mechanism of the impact and attempts to provide a conceivable explanation for the heterogeneity of household portfolio choice.Accordingly,relevant suggestions are provided to individual households and policymakers.In terms of theoretical part,this paper bases on life-cycle hypothesis and analyzes the effects of longevity risk on the optimal financial decisions of households.Under the theoretical framework of "information-expectation-decision",this paper constructs theoretical models and explores the mechanisms according to the classification of household assets.The results show that longevity risk exerts important effects on portfolio choice,which arises from the formation of subjective life expectancy of residents.This paper focuses on the stock market participation,life insurance demand and housing allocation of households.The results indicate that:(1)With the unprecedented increases in life expectancy,the retirement period increases accordingly.Individuals need to maintain a certain level of consumption during retirement.The forward-looking expectation puts forward higher requirements for the level of wealth accumulation,and thus encourages households to increase the proportion of investment in risky assets such as stocks.Furthermore,the increase of life expectancy will change the population’s age structure,which reduces the impact of longevity risk on household stock market participation.The accumulation of human capital will buffer the adverse impact of longevity risk,which has a positive effect on stock market participation.(2)As for the life insurance demand,households can mitigate the impact of uncertainty on future consumption by purchasing guaranteed life insurance so as to maximize the lifetime utility.Driven by the forward-looking expectation,they will also increase the demand for investment products such as investment life insurance.Furthermore,the "age structure effect" will increase households’demand for the security function provided by life insurance.(3)Subjective life expectancy is the conditional expectation of individual under the given information set.As an important element of the information set,longevity risk exerts important effects on the formation of residents’ subjective life expectancy.The increase of subjective life expectancy will improve the allocation of risky asset and annuity through horizon effects and cognitive ability,while decrease the allocation of housing.However,the bequest motive will strengthen risk aversion and weaken the impact mentioned above.In terms of empirical study,this paper systematically collects and uses a variety of datasets including macro,provincial and micro levels,and conducts empirical analysis according to the theoretical framework.The conclusions are drawn as follows.As for the impact of longevity risk on stock market participation,the results indicate that:(1)Longevity risk can significantly improve the intensive margin and extensive margin of household stock market participation.The results show that the contribution of life expectancy growth to the increase of stock market participation rate is about 21.42%,and the contribution to the increase of equity assets allocation is about 14.82%.(2)The increase of elderly dependency ratio will weaken the positive impact of prolonged life expectancy on household stock market participation,while the improvement of education level will strengthen the positive impact.(3)The level of household wealth accumulation exerts a mediating effect in the influence path,which accounts for about 25%of the total effect.With regard to the impact of longevity risk on life insurance demand,I find that:(1)Longevity risk has significant positive effects on life insurance density and penetration.The results show that the contribution of life expectancy growth to the increase of life insurance density is about 21.47%,and the contribution to the increase of life insurance penetration is about 49.48%.(2)The increase of elderly dependency ratio will strengthen the positive impact of prolonged life expectancy on household life insurance demand.Longevity risk indexed delayed annuities(LRIDA),which links the payment of annuity to longevity risk index,is an effective tool for longevity risk management.It is necessary to introduce the assumption of dynamic mortality into the pricing model and consider the differences in calendar years.The results show that the LRIDA can help annuity providers transfer a large amount of systematic longevity risk.Households can also get a higher risk coverage at a lower price and alleviate the individual longevity risk effectively.With respect to the influence of subjective life expectancy,I find that:(1)Longevity risk has a significant positive effect on subjective life expectancy of the middle aged and elderly residents and subjective life expectancy formation is consistent with rational expectations hypothesis.While observing the longevity risk,residents will adjust their subjective judgment of future lifespan.(2)Households with longer subjective life expectancy are more likely to hold government bonds,risky assets and annuity as well as increase the proportion of these assets.However,the increase of subjective life expectancy has significant negative effects on the allocataion of housing.In conclusion,households with longer subjective life expectancy tend to transefer assets from housing to financial assets,such as stocks,mutual funds,government bonds and annuity.While bequest motive has a significant negative effect on the allocation of corresponding assets.The implications of this paper are as follows.First,subjective life expectancy of the middle aged and elderly residents is of great significance to the research of household financial choices.Policymakers should not only pay attention to the economic expectation management,but also carry out the management of subjective life expectancy actively.Moreover,policymakers should take into account the impact of longevity risk on household portfolio choice and establish supporting policies to guide the behaviors of households.Second,it is necessary for life insurance industry to fully consider the impact of longevity risk on household life insurance demand and provide a range of innovative products to meet the needs of a new type of old-age security.Meanwhile,life insurance companies should raise the awareness of longevity risk management and strengthen the cooperation with other stakeholders to cope with longevity risk.Third,reasonable allocation of household assets is one of the effective means of longevity risk management.Households should increase the understanding of longevity risk and work out a retirement plan based on the reasonable assessment of subjective life expectancy of family members.By holding a portfolio of risky assets and annuity properly,household can smooth consumption level over the life-cycle and get guaranteed in the late life. |
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