National culture and life insurance consumption


This cross-disciplinary study examines the way national culture affects consumption patterns of life insurance across countries. Life insurance is a service that is abstract, complex, and focused on unsure future benefits. Because of the uncertainty and ambiguity inherent in the life insurance product, consumers are more likely to respond according to their cultural prescriptions. Our research hypotheses are tested empirically using Hofstede's cultural dimensions, and data from 1976–2001 across 41 countries. The findings show that individualism indeed has a significant, positive effect on life insurance consumption, whereas power distance and masculinity/femininity have significant, negative effects. The results are robust, even after controlling for economic, institutional and demographic determinants.

This is a preview of subscription content, log in to check access.


  1. 1.

    Several concerns have been raised regarding the Hofstede dimensions: (1) that his empirical work is based on a single, multinational corporation; (2) that the dimensions are too broad, and some other important value dimensions have not been included; and (3) that his cultural scores based on his empirical work in 1967–1973 may be dated. Despite these criticisms, Hofstede's dimensions are still the most widely used cultural indices in the international business literature.

  2. 2.

    The initial dimensions of Hofstede are derived from his empirical work that took place in 1967–73. As reviewed in Leung et al. (2005), there have been novel dimensions. For instance, Schwartz (1994) has identified seven cultural-level dimensions of values. Leung et al. (2002) create a social axiom survey based on items culled from the psychological literature as well as from qualitative research conducted in Hong Kong and Venezuela. Alternatively, House et al. (2004) conduct a GLOBE project that adopts a theory-based approach. Despite the use of different items to identify cultural dimensions, House et al.'s results are consistent with previous findings, and most of the cultural dimensions identified are related conceptually and correlated empirically with Hofstede's dimensions, suggesting that the Hofstede dimensions are quite robust (Leung et al., 2005: 366).

  3. 3.

    In the 2001 update of his book, Hofstede proposes one more cultural dimension: long-term orientation. However, the data for this dimension are less complete than those for the four original dimensions. If we include this variable in our test, our sample of countries will be reduced from 41 to 18, and the number of observations in our sample will be reduced from 853 to 377. Therefore this cultural dimension is not included in this study.

  4. 4.

    However, a study using a large sample of countries is a rarity in international business research. Typically two to four countries are compared in cross-national studies (Samiee & Jeong, 1994). To alleviate this issue, Sivakumar and Nakata (2001) suggest an algorithm in choosing country combinations that would strengthen hypothesis testing.

  5. 5.

    Social security is not included in the current study, because previous studies indicate that the relationship between life insurance consumption and social security is insignificant (Beck & Webb, 2003; Outreville, 1996). Our conclusion will not be affected even if we include social security in our analysis.

  6. 6.

    These socialist countries are Bulgaria, China, Czech Republic, Hungary, Poland, Romania, Slovak Republic, and Vietnam. Most of these socialist countries started to transform into market economies in the 1990s. However, the initial conditions of their life insurance markets are still quite different from those of the non-socialist countries. These differences in initial conditions could be an important determinant for the development of the life insurance markets across countries. The authors thank the referee for bringing up this point.

  7. 7.

    We do not separate our religion measure into Protestant, Catholic and Muslim, because we believe that a religious person will generally purchase less life insurance if he/she perceives that buying life insurance shows a distrust of God's protection. Our measure on religion may underestimate the share of religious people out of the total population, because this measure only counts those people with a Protestant, Catholic or Muslim belief. For example, since Buddhism is very popular in Asia, our religion measure will underestimate the proportion of religious people in Asian countries. Data on other religions, however, are not available to us.

  8. 8.

    We first compute the time-series means of the time-varying variables for each country over the years from 1976 to 2001 and then estimate the correlations across countries. We require each country to have at least 20 observations for this variable over the period from 1976 to 2001. Since none of the eight socialist countries has 20 observations on life insurance density, these countries are excluded from the correlation analysis.

  9. 9.

    As a robustness test, we also estimate Equation (1) using the data for the explanatory variables instead of the three principal components. We obtain similar results for the relationship between life insurance consumption and the cultural variables.

  10. 10.

    The economic component (Prin Econ ) is positively correlated to national income, and developments in the bank and stock sectors, but it is negatively correlated to expected inflation rate and State. Therefore we expect the coefficient on Prin Econ (η1) to be positive. Since the institutional component (Prin Inst ) is positively correlated to Credit and ConRisk, we expect the coefficient on Prin Inst (η2)to be positive. On the other hand, the demographic component (Prin Demo ) is positively correlated to the dependency ratio and Religion. As a result, the sign of the coefficient on Prin Demo (η3) has to be determined empirically.

  11. 11.

    To save space, we do not report the intercept estimate (α) and the estimated coefficients on the year dummy variables, because time effects are not the focus of this study.

  12. 12.

    Judge, Hill, Griffiths, Lutkepohl, and Lee (1988) suggest that a value of variance inflation factor (condition number) that is 5 (30) or more is an indication of severe multicollinearity. In our regression analysis, all the estimated coefficients have variance inflation factors much less than 5, and the condition numbers of our regression are all less than 30.

  13. 13.

    To conserve space, the additional findings using the GLOBE dimensions are not reported in this paper, but will be made available to readers upon request.


  1. Au, K. Y. 1999. Intra-cultural variation: evidence and implications for international business. Journal of International Business Studies, 30 (4): 799–812.

    Article  Google Scholar 

  2. Beck, T., & Webb, I. 2003. Economic, demographic, and institutional determinants of life insurance consumption across countries. World Bank Economic Review, 17 (1): 51–88.

    Article  Google Scholar 

  3. Beck, T., Demirguc-Kunt, A., & Levine, R. 2003. A new database on financial development and structure. Working paper, World Bank.

  4. Briley, D. A., Morris, M. W., & Simonson, I. 2000. Reasons as carriers of culture: Dynamic versus dispositional models of cultural influence on decision making. Journal of Consumer Research, 27 (2): 157–178.

    Article  Google Scholar 

  5. Browne, M. J., & Kim, K. 1993. An international analysis of life insurance demand. Journal of Risk and Insurance, 60 (4): 616–634.

    Article  Google Scholar 

  6. Chui, A. C. W., Lloyd, A., & Kwok, C. C. Y. (2002). The determination of capital structure: Is national culture the missing piece to the puzzle? Journal of International Business Studies, 33 (1): 99–127.

    Article  Google Scholar 

  7. Crosby, L. A., & Stephens, N. 1987. Effects of relationship marketing on satisfaction, retention, and prices in the life insurance industry. Journal of Marketing Research, 24 (4): 404–411.

    Article  Google Scholar 

  8. De Mooij, M. 1998a. Global marketing and advertising: Understanding cultural paradoxes. Thousand Oaks, CA: Sage.

    Google Scholar 

  9. De Mooij, M. 1998b. Masculinity/femininity and consumer behaviour. In G. Hofstede and Associates (Eds), Masculinity and femininity: The taboo dimension of national cultures. Thousand Oaks, CA: Sage, 55–73.

    Google Scholar 

  10. De Mooij, K. 2001. Convergence–divergence. Unpublished doctoral dissertation, Universidad de Navarra.

  11. Gelfand, M. J., Higgins, M., Murakami, F., Yamaguchi, S., Nishii, L. H., Raver, J. L., & Dominguez, A. 2002. Culture and egocentric perceptions of fairness in conflict and negotiation. Journal of Applied Psychology, 87 (5): 833–845.

    Article  Google Scholar 

  12. Grinblatt, M., & Keloharju, M. 2001. How distance, language, and culture influence stockholdings and trades. Journal of Finance, 56 (3): 1053–1073.

    Article  Google Scholar 

  13. Heine, S. J., & Lehman, D. R. 1995. Cultural variation in unrealistic optimism: Does the West feel more invulnerable than the East? Journal of Personality and Social Psychology, 68 (4): 595–607.

    Article  Google Scholar 

  14. Hofstede, G. 1983. The cultural relativity of organizational practices and theories. Journal of International Business Studies, 14 (2): 75–89.

    Article  Google Scholar 

  15. Hofstede, G. 2001. Culture's consequences: Comparing values, behaviors, institutions, and organizations across nations, (2nd ed.) Beverly Hills, CA: Sage.

    Google Scholar 

  16. Hofstede, G., & Bond, M. H. 1988. The Confucius connection: From cultural roots to economic growth. Organizational Dynamics, 15 (1): 4–21.

    Google Scholar 

  17. House, R. J., Hanges, P. J., Javidan, M., Dorfman, P. W., & Gupta, V. 2004. Culture, leadership, and organizations: The GLOBE study of 62 societies. Thousand Oaks, CA: Sage.

    Google Scholar 

  18. Johar, G. V., Maheswaran, D., & Peracchio, L. A. 2006. Mapping the frontiers: Theoretical advances in consumer research on memory, affect, and persuasion. Journal of Consumer Research, 33 (1): 139–149.

    Article  Google Scholar 

  19. Judge, G. G., Hill, R. C., Griffiths, W., Lutkepohl, H., & Lee, T. C. 1988. Introduction to the theory and practice of econometrics, (2nd ed.) New York: John Wiley & Sons.

    Google Scholar 

  20. Kelley, L., Whatley, A., & Worthley, R. 1987. Assessing the effects of culture on managerial attitudes: A three-culture test. Journal of International Business Studies, 18 (2): 17–31.

    Article  Google Scholar 

  21. Kirkman, B., Lowe, K., & Gibson, C. 2006. A quarter century of Culture's Consequences: A review of empirical research incorporating Hofstede's cultural values framework. Journal of International Business Studies, 37 (3): 285–320.

    Article  Google Scholar 

  22. Kwok, C. C. Y., & Tadesse, S. 2006. National culture and financial systems. Journal of International Business Studies, 37 (2): 227–247.

    Article  Google Scholar 

  23. La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. 1999. The quality of government. Journal of Law, Economics, and Organization, 15 (1): 222–279.

    Article  Google Scholar 

  24. Leung, K., Bond, M. H., Reimel de Carrasquel, S., Munoz, C., Hernandez, M., Murakami, F., Yamaguchi, S., Bierbrauer, G., & Singelis, T. M. 2002. Social axioms: The search for universal dimensions of general beliefs about how the world functions. Journal of Cross-Cultural Psychology, 33 (3): 286–302.

    Article  Google Scholar 

  25. Leung, K., Bhagat, R. S., Buchan, N. R., Erez, M., & Gibson, C. B. 2005. Culture and international business: Recent advances and their implications for future research. Journal of International Business Studies, 36 (4): 357–378.

    Article  Google Scholar 

  26. Levine, R. 1999. Law, finance, and economic growth. Journal of Financial Intermediation, 8 (1–2): 8–35.

    Article  Google Scholar 

  27. Mandel, N. 2003. Shifting selves and decision making: The effects of self-construal priming on consumer risk-taking. Journal of Consumer Research, 30 (1): 30–40.

    Article  Google Scholar 

  28. Markus, H. R., & Kitayama, S. 1991. Culture and the self: Implications for cognition, emotion, and motivation. Psychological Review, 98 (2): 224–253.

    Article  Google Scholar 

  29. Morosini, P., Shane, S., & Singh, H. 1998. National cultural distance and cross-border acquisition performance. Journal of International Business Studies, 29 (1): 137–158.

    Article  Google Scholar 

  30. Newman, K. L., & Nollen, S. D. 1996. Culture and congruence: The fit between management practices and national culture. Journal of International Business Studies, 27 (4): 753–780.

    Article  Google Scholar 

  31. Outreville, J. F. 1996. Life insurance markets in developing countries. Journal of Risk and Insurance, 63 (2): 263–278.

    Article  Google Scholar 

  32. Samiee, S., & Jeong, I. 1994. Cross-cultural research in advertising: An assessment of methodologies. Journal of the Academy of Marketing Science, 22 (3): 205–217.

    Article  Google Scholar 

  33. Schwartz, S. H. 1994. Beyond individualism/collectivism: New cultural dimensions of values. In U. Kim, H. C. Triandis, Ç. Kagitcibasi, S. -C. Choi & G. Yoon (Eds), Individualism and collectivism: Theory, method and applications. Thousand Oaks, CA: Sage, 85–99.

    Google Scholar 

  34. Shenkar, O. 2001. Cultural distance revisited: Towards a more rigorous conceptualization and measurement of cultural differences. Journal of International Business Studies, 32 (3): 519–535.

    Article  Google Scholar 

  35. Sivakumar, K., & Nakata, C. 2001. The stampede toward Hofstede's framework: Avoiding the sample design pit in cross-cultural research. Journal of International Business Studies, 32 (3): 555–574.

    Article  Google Scholar 

  36. Steenkamp, J. E. M., ter Hofstede, F., & Wedel, M. 1999. A cross-national investigation into the individual and national cultural antecedents of consumer innovativeness. Journal of Marketing, 63 (2): 55–69.

    Article  Google Scholar 

  37. Triandis, H. C. 2001. Individualism–collectivism and personality. Journal of Personality, 69 (6): 907–923.

    Article  Google Scholar 

Download references


We thank our colleagues Helen Doerpinghaus and Xu Huang for providing helpful comments. Andy Chui acknowledges the financial support from the Hong Kong Polytechnic University (A-PG29), and Chuck Kwok gratefully acknowledges the support of the Center for International Business Education and Research (CIBER) at the University of South Carolina for this research project.

Author information



Corresponding author

Correspondence to Chuck C Y Kwok.

Additional information

Accepted by Lorraine Eden, Departmental Editor, 24 June 2007. This paper has been with the authors for two revisions.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Chui, A., Kwok, C. National culture and life insurance consumption. J Int Bus Stud 39, 88–101 (2008).

Download citation


  • national culture
  • insurance
  • insurance consumption
  • Hofstede