The effect of haze pollution on insurance development: Evidence from 268 prefecture-level cities in China

Abstract

The relationship between haze pollution and insurance development is investigated based on the concentration of PM2.5 of 268 Chinese cities during 2009~2018. Subsequently, the effect of haze pollution on the development of insurance and the underlying mechanisms are also explored. The regional governance of haze pollution and its impact on insurance development is estimated by using a unified framework of two-stage least squares. The machine learning method-elastic network is adopted to filter the control variables and avoid multi-collinearity. The results show that haze pollution has an adverse effect on the insurance development through two important underlying mechanisms, residents’ emotions and economic development. Haze pollution affects residents’ emotions, and the impact coefficient is approximately equal to -0.18, which further inhibits residents’ participation in insurance. Moreover, pollution restricts residents’ budgets by hindering economic development, the impact coefficient is about -0.07, thus, the development of insurance is suppressed. These two negative effects exhibit regional variations, which gradually attenuate from eastern, western to the Chinese central region. The regional governance has a positive effect on haze pollution with the coefficient of -0.07, while impact coefficient of haze pollution on insurance development decreases to -0.02. The policy implication is that government supervision can formulate reasonable environmental and insurance policies based on the heterogeneity of regional development to alleviate haze pollution and promote insurance development.

Haze pollution and urban sprawl: An empirical analysis based on panel simultaneous equation model

“…Most of the employed people are highly mobile agricultural transferees who choose peri-urban areas in order to reduce the cost of commuting and housing, which in turn increases the demand for housing and real estate development and construction, resulting in urban sprawl. In addition, the degree of haze pollution in eastern China is greater than that in central and western China, and haze pollution is characterized by regional heterogeneity (Chang et al, 2022 [ 11 ]).…”

“…In 2016, Yale University released its Environmental Performance Index Report, which again pointed out that China is already the world’s PM2.5 hardest-hit area, with its air quality ranking at the bottom of the list of 180 participating countries [ 10 ]. Although the Chinese government has been trying to improve the current situation of haze pollution, its haze pollution is still severe (Chang et al, 2022 [ 11 ]).…”