A Study On The Influence Of Financial Literacy Overconfidence On The Decision Making Of Commercial Endowment Insurance

According to the data of the seventh national population census,the proportion of people aged 65 and above in China reached 13.50%,approaching a severely aging society.The large number of the elderly population and the increasing life expectancy make individuals,enterprises and governments face huge financial pressure for the elderly.As a vital part of the third pillar of personal pension,commercial pension insurance can effectively relieve the financial pressure of the government and enterprises.However,at the current stage,the development of the commercial pension insurance market in China is still very limited and faces a major development bottleneck.As a human capital that affects residents’ savings and investment,financial literacy plays an important role in residents’ decision-making on the purchase of commercial endowment insurance.On the other hand,from the perspective of behavioral economics,market participants have cognitive biases in their financial literacy due to cognitive limitations,psychological status and other reasons.Among them,consumers’ overconfidence in their financial literacy is a typical and common cognitive bias.Consumers overestimate their financial literacy,resulting in blind optimism about life after retirement,and then make irrational insurance decisions that do not meet their own interests.Therefore,it is of practical significance to study the impact of overconfidence in their financial literacy on residents’ commercial endowment insurance policy decision.Based on the survey data of 2020 China Residents’ Retirement Readiness Index Report,this paper constructs subjective and objective financial literacy,overconfidence in financial literacy and overconfidence bias value variables based on respondents’ answers to the "three major questions" of financial literacy and their own estimation of their ability to understand financial issues,and empirically studies the impact of overconfidence in financial literacy and the degree of overconfidence deviation on the decision-making of commercial endowment insurance through Logit regression model,On this basis,the mechanism of the influence is further explored by using the intermediary utility model.The research shows that overconfidence in financial literacy will significantly negatively affect the decision-making of commercial endowment insurance.The deviation value of overconfidence is significantly negatively correlated with the insurance of commercial endowment insurance,that is,the higher the degree of overconfidence,the lower the possibility of insurance of commercial endowment insurance.Further analysis of the intermediary effect results shows that overconfidence in financial literacy will affect the decision-making of commercial endowment insurance by reducing consumers’ adoption of professional financial advice.The innovation of this paper is mainly reflected in: First,in the existing analysis of the research on overconfidence in financial literacy,the research objects are mainly focused on financial investment,personal consumption and other aspects,while the literature on the impact of commercial pension insurance is also relatively scarce.This paper focuses on the commercial pension insurance,which is a supplement to the existing research.Second,the existing literature studies the method of overconfidence in financial literacy,mainly through the construction of a 0-1 variable regression analysis with or without overconfidence.This method only analyzes whether overconfidence in financial literacy will affect the insurance decision of commercial endowment insurance,but does not study the relationship between the internal differences of overconfidence samples and the insurance decision.Based on the existing literature,this paper further measures the relationship between overconfidence bias(i.e.overconfidence level)and commercial endowment insurance policy decision,which enriches the research content of financial literacy overconfidence.Third,there is little research on the impact mechanism of overconfidence in financial literacy on consumer behavior.This paper deduces the mechanism of overconfidence in financial literacy affecting insurance decision-making by using the theory of intertemporal decision-making model of consumption,and uses the intermediary effect model for empirical verification,which is innovative.