A Discussion on the Impact and Management of Longevity Risk on Households, Enterprises and Governments in the Context of Aging in China

Research Article
Open access

A Discussion on the Impact and Management of Longevity Risk on Households, Enterprises and Governments in the Context of Aging in China

Yiping Wen 1*
  • 1 Dongbei University of Finance and Economics, Shenyang, China    
  • *corresponding author 2376405380@qq.com
Published on 21 March 2023 | https://doi.org/10.54254/2754-1169/3/2022819
AEMPS Vol.3
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-15-7
ISBN (Online): 978-1-915371-16-4

Abstract

The aging of China's population has become a significant social problem. The resulting longevity risk is a new and growing challenge for households, businesses and governments. This paper discusses the influence of longevity risk on different subjects and management methods by combining theoretical analysis and data analysis. From the perspective of households, based on the life cycle hypothesis, this paper demonstrates that the increase in life expectancy will reduce the total utility by reducing the average consumption level of individuals (families). For the general enterprises and the insurance industry, longevity risk means the rapid accumulation of future operating costs and may even bring liquidity risk. As for the government, they are the manager of the social pension fund, which is faced with the problem of balancing the income and payments under the background of the significant increase in the average life expectancy of the population. As a link, the financial market can transfer and disperse longevity risk among different subjects. However, there is a shortage of investors and issuers in the Chinese financial market. The rate of Chinese households participating financial market is low, and the progress of Longevity risk securitization in financial sectors is slow. Therefore, in managing longevity risk, China should focus on increasing the utilization of capital markets.

Keywords:

Risk Management, Life Cycle Hypothesis., Longevity Risk, Population Aging

Wen,Y. (2023). A Discussion on the Impact and Management of Longevity Risk on Households, Enterprises and Governments in the Context of Aging in China. Advances in Economics, Management and Political Sciences,3,439-449.
Export citation

References

[1]. MacMinn, R., Brockett, P., & Blake, D. (2006). Longevity risk and capital markets. The Journal of Risk and Insurance, 73(4), 551-557.

[2]. Lee, R. D., & Carter, L. R. (1992). Modeling and forecasting US mortality. Journal of the American statistical association, 87(419), 659-671.

[3]. Berry, P., Tsui, L., & Jones, G. (2010, September). Our new “old” problem–pricing longevity risk in Australia. In 6th International Longevity Risk and Capital Markets Solutions Conference, Sydney (pp. 9-10).

[4]. Lin, Y., & Cox, S. H. (2005). Securitization of mortality risks in life annuities. Journal of risk and Insurance, 72(2), 227-252.

[5]. Zhao Ming& Wang Xiaojun. (2015). Measurement of Longevity Risk in insurance company. Statistical study, (12), 76-83.

[6]. Pang Xuesong. A Study on The Longevity Risk in Aging [D]. GuangXi University ,2017.

[7]. Yang Qianqian. (2019).Longevity Risk、Subjective Life Expectancy and Household Portfolio Choice (Doctoral Dissertation, Zhejiang University) From: https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CDFDLAST2020&filename=1019114852.nh

[8]. Modigliani, F., & Brumberg, R. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. Franco Modigliani, 1(1), 388-436.

[9]. Liu Yongping & Huang Lizhen.(2009). The impact of family child mortality risk on economic growth. Journal of Fuzhou University (Philosophy and Social Sciences) (05),17-23+112.

[10]. Merton, R. C. (1969). Lifetime portfolio selection under uncertainty: The continuous-time case. The review of Economics and Statistics, 247-257.

[11]. Han Meng & Wang Xiaojun.(2010). Application and improvement of Lee-Carter model in urban population mortality prediction in China. Insurance research (10),3-9. doi:10.13497/j.cnki.is.2010.10.001.

[12]. Li Zhisheng, & Liu Hengjia. (2010). Estimation and Application of the Lee-Carter Mortality model: An analysis based on Chinese population data. Chinese Population Science, (3), 46-56.

[13]. Huang Shuyan.(2021). Research on the basic pension Gap of urban Enterprise workers in Yunnan Province (Master's Thesis, Yunnan University of Finance and Economics).https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CMFD202102&filename=1021614889.nh

Cite this article

Wen,Y. (2023). A Discussion on the Impact and Management of Longevity Risk on Households, Enterprises and Governments in the Context of Aging in China. Advances in Economics, Management and Political Sciences,3,439-449.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of the 6th International Conference on Economic Management and Green Development (ICEMGD 2022), Part Ⅰ

ISBN：978-1-915371-15-7(Print) / 978-1-915371-16-4(Online)
Editor：Javier Cifuentes-Faura, Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2022
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.3
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. MacMinn, R., Brockett, P., & Blake, D. (2006). Longevity risk and capital markets. The Journal of Risk and Insurance, 73(4), 551-557.

[2]. Lee, R. D., & Carter, L. R. (1992). Modeling and forecasting US mortality. Journal of the American statistical association, 87(419), 659-671.

[3]. Berry, P., Tsui, L., & Jones, G. (2010, September). Our new “old” problem–pricing longevity risk in Australia. In 6th International Longevity Risk and Capital Markets Solutions Conference, Sydney (pp. 9-10).

[4]. Lin, Y., & Cox, S. H. (2005). Securitization of mortality risks in life annuities. Journal of risk and Insurance, 72(2), 227-252.

[5]. Zhao Ming& Wang Xiaojun. (2015). Measurement of Longevity Risk in insurance company. Statistical study, (12), 76-83.

[6]. Pang Xuesong. A Study on The Longevity Risk in Aging [D]. GuangXi University ,2017.

[7]. Yang Qianqian. (2019).Longevity Risk、Subjective Life Expectancy and Household Portfolio Choice (Doctoral Dissertation, Zhejiang University) From: https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CDFDLAST2020&filename=1019114852.nh

[8]. Modigliani, F., & Brumberg, R. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. Franco Modigliani, 1(1), 388-436.

[9]. Liu Yongping & Huang Lizhen.(2009). The impact of family child mortality risk on economic growth. Journal of Fuzhou University (Philosophy and Social Sciences) (05),17-23+112.

[10]. Merton, R. C. (1969). Lifetime portfolio selection under uncertainty: The continuous-time case. The review of Economics and Statistics, 247-257.

[11]. Han Meng & Wang Xiaojun.(2010). Application and improvement of Lee-Carter model in urban population mortality prediction in China. Insurance research (10),3-9. doi:10.13497/j.cnki.is.2010.10.001.

[12]. Li Zhisheng, & Liu Hengjia. (2010). Estimation and Application of the Lee-Carter Mortality model: An analysis based on Chinese population data. Chinese Population Science, (3), 46-56.

[13]. Huang Shuyan.(2021). Research on the basic pension Gap of urban Enterprise workers in Yunnan Province (Master's Thesis, Yunnan University of Finance and Economics).https://kns.cnki.net/KCMS/detail/detail.aspx?dbname=CMFD202102&filename=1021614889.nh

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.