A subregional panel data analysis of life insurance consumption in Italy

We propose a subregional panel approach to the determinants of life insurance development, with new methodological tools, applied to Italian data. Our sample has enough variability in observables and less unobserved heterogeneity than cross-country ones, but is potentially affected by spatial dependence and serial correlation. We propose an encompassing estimator, showing that the spatial diffusion process of life insurance is driven by idiosyncratic shocks in neighbors. Our results partly reconcile the aggregate perspective with survey evidence supporting, in contrast to international studies, a negative link between education and risk aversion, and identifying the positive effect of young dependents predicted by theory.