Social security, health capital and household investment behavior

Abstract

The correlation between social security systems and household investment behavior has long intrigued economists. However, the mechanisms through which social safety nets affect investment decisions remain unclear. Furthermore, the potential moderating role of health capital, encompassing physical and mental health, has been underexplored. This study uses data from the 2020 China Family Panel Studies to examine the relationship between social security coverage and household investment behavior, with health capital as a moderator. The results reveal a positive association between social security coverage and the propensity for risky investments, which is significantly moderated by physical and mental health, with the latter having a stronger effect. These effects vary across regions and income levels, with the strongest impacts demonstrated in developed areas and high-income households. These findings elucidate the complex pathways through which social policies influence household investment behavior, providing insights for policymakers aiming to increase financial market participation in rapidly evolving economies.