Insurance spending is defined as the ratio of direct gross premiums to GDP, which represents the relative importance of the insurance industry in the domestic economy. This indicator is expressed as a percentage of GDP.

We consider a two-period model. In the first period, individuals consume two goods: one is sinful and the other is not. The sin good brings pleasure but has a detrimental effect on second period health and individuals tend to underestimate this effect. In the second period, individuals can...