Endowment insurance and family consumption behavior in China: A comparison based on the participation and payment stages

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This paper examines the relationship between endowment insurance and household consumption in China, a key issue in understanding the role of social security policies in shaping household financial behavior. Using data from the China Family Panel Studies spanning 2012 – 2018, we employed a two-way fixed effects model and fuzzy breakpoint regression to analyze how participation in endowment insurance influences both consumption levels and structures. We focus on heterogeneity in consumption behavior across household registration types, geographic regions, and demographic characteristics such as age and income. The findings reveal that participating in endowment insurance generally enhances household consumption across various family types, with particularly strong effects for rural households, those in central regions, and families with members aged 60 and above. In addition, while participation in endowment insurance is associated with consumption upgrading, the receipt of pension benefits alone does not appear to influence consumption levels in the same way. A key result is the identification of a breakpoint in consumption behavior at pension age, after which household consumption tends to decline, especially in households with lower pension benefits. These results suggest that enhancing endowment insurance coverage and security could significantly boost household consumption and optimize spending patterns, particularly in rural and economically disadvantaged regions. Moreover, the findings have important policy implications for addressing income inequality and improving the economic welfare of vulnerable populations.

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