Factors influencing the willingness to pay for insurance in Norway : An empirical study of the willingness to pay for small insurance contracts

Abstract

The purpose of this study is to investigate how the choice of deductible, degree of risk aversion and the level of income influence the willingness to pay for small insurance contracts in Norway. We use data from a survey where individuals were asked to answer on a lifetime income lottery, as well as to answer on how much they were willing to pay for an insurance contract on a mobile phone. An interval regression for panel data is used to handle the survey data. Our results suggest that the willingness to pay for small insurance contracts decreases with both a higher income and a higher deductible. However, we can not draw a reliable conclusion about risk aversion based on our results.