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The role of the peer effect in forming pension expectations among the middle-aged: existence and mechanisms

Published online by Cambridge University Press:  23 February 2024

Zining Liu Open the ORCID record for Zining Liu [Opens in a new window] ,
Youji Lyu ,
Yi Yao  and
Wei Zheng
Zining Liu
Affiliation:
School of Insurance, Central University of Finance and Economics, Beijing, China
Youji Lyu*
Affiliation:
School of Finance, Nankai University, Tianjin, China
Yi Yao
Affiliation:
School of Economics, Peking University, Beijing, China China Center for Insurance and Social Security Research (CCISSR), Peking University, Beijing, China
Wei Zheng
Affiliation:
School of Economics, Peking University, Beijing, China China Center for Insurance and Social Security Research (CCISSR), Peking University, Beijing, China
*
Corresponding author: Youji Lyu; Email: lyjecon@nankai.edu.cn
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Abstract

Using the instrumental variable approach on nationally representative, individual-level data on middle-aged pension participants in China, this study quantifies the peer effect in the context of forming pension expectations. The study confirms the existence of the peer effect in forming pension expectations in the community. The probability of having optimistic pension expectations significantly increases by 0.309 percentage points if the proportion of optimists in the community increases by 1 percentage point. Moreover, the study explores the channels through which the peer effect operates and finds that the social learning channel dominates the social norms channel. The study also provides empirical evidence that village and township leaders as well as those with old pension program experience are opinion leaders in their peer group. Lastly, we find peer effects in other pension decisions, e.g., contribution size, and the contribution size increases by the proportion of optimists in the community. The study provides policy implications on ways to improve willingness to contribute to pension programs.

Keywords

instrumental variablepeer effectpension expectationspublic pension benefitsD85H55Z13
Type
Article
Information
Journal of Pension Economics & Finance , First View , pp. 1 - 25
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press

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