The Impact of Mental Accounting on Health Insurance Purchase Behavior

Abstract

Mental accounting, a key behavioral economics concept, significantly influences decision-making, yet its impact on health insurance remains understudied. Globally, 45% of consumers misclassify premiums as "non-essential," while China's health insurance coverage is only 7.2%, suggesting cognitive biases contribute to low uptake. This study analyzes 100 survey responses to examine mental accounting's role. Chi-square tests assessed how categorizing insurance (investment, protection, or burden) affects preferences (H1). Spearman correlation and t-tests evaluated risk perception's link to mental accounting utility (H2) and sunk costs' impact on renewals (H3). The key finding is that framing insurance as a "long-term investment" increased purchase willingness by 68%. High-risk groups valued premium protection 30% more than low-risk groups. Notably, 52% who discontinued coverage viewed prior payments as sunk costs, reducing renewals. The study highlights mental accounting, risk perception, and sunk costs as critical factors in insurance decisions. Insurers should refine product positioning and renewal reminders to align with consumer psychology. These insights advance behavioral insurance theory and offer practical guidance for product and policy development.