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The impact of private health insurance on household savings : Evidence from Australia

Author

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  • Nguyen, John

    (Monash University)

Abstract

This paper analyses for the first time, the relationship between private health insurance and household savings behaviour in Australia. Using the nationally representative longitudinal dataset from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, we estimate the effect of private health insurance on savings, wealth accumulation and different types of asset holdings. We find strong evidence of a positive relationship between private health insurance and savings using a variety of panel fixed-effects, instrumental and non- instrumental methods. The magnitude of the effect is larger for households that do not receive public transfers, reside in a major city, have better health or have completed tertiary education. Our findings show that time preference is a partial mediation channel between private health insurance and savings, resulting in larger effects for non-financial asset holdings driven mostly by real estate wealth.

Suggested Citation

  • Nguyen, John, 2023. "The impact of private health insurance on household savings : Evidence from Australia," Warwick-Monash Economics Student Papers 48, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:48
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    More about this item

    Keywords

    Private health insurance ; savings; wealth accumulation ; Australia JEL classifications: I13 ; D14 ; E21 ; G51;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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