Survival Pessimism and the Demand for Annuities
Bibliographic Data
| ID | 19318154 |
|---|---|
| Authors | Cormac O’Dea (0000-0002-1083-1495, Institute for Fiscal Studies), Cormac O'Dea (Yale University, NBER and Institute for Fiscal Studies), David Sturrock (0000-0001-6048-4156, University College London and Institute for Fiscal Studies) |
| Year | 2023 |
| Volume | 105 |
| Issue | 2 |
| Pages | 442-457 |
| Publication date | 2023-03-03 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Review of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0034-6535 • E-ISSN: 1530-9142 |
| Publisher | MIT Press (PUBLISHER • US) |
| DOI | 10.1162/rest_a_01048 |
| OpenAlex | W3163229695 |
| Language | EN |
| Citations received | 5 |
| References cited | 26 |
The “annuity puzzle” refers to the fact that annuities are rarely purchased despite the longevity insurance they provide. Most explanations for this puzzle assume that individuals have accurate expectations about their future survival. We provide evidence that individuals misperceive their mortality risk and study the demand for annuities in a setting where annuities are priced by insurers on the basis of objectively-measured survival probabilities but in which individuals make purchasing decisions based on their own subjective survival probabilities. Subjective expectations have the capacity to explain significant rates of nonannuitization, yielding a quantitatively important explanation for the annuity puzzle
Actuarial science · Annuity · Economics · Life annuity · Longevity risk · Operations management · Pension · Pessimism · Purchasing · Finance · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Insurance, Mortality, Demography, Risk Management
Youth Subjective Life Expectancy and Early Labor Market Choices
Does subjective life expectancy matter in purchasing life insurance among middle-aged and older adult? Evidence from China
Indulgence, Self-Control, and Annuity Preferences
To Engage or Not to Engage? Social Activities and Survival Beliefs in Older Adults
Is the accuracy of individuals' survival beliefs associated with their knowledge of population life expectancy
Uncertain Lifetime, Life Insurance, and the Theory of the Consumer
Evaluation of the Subjective Probabilities of Survival in the Health and Retirement Study
The Predictive Validity of Subjective Mortality Expectations
Adverse Selection in Insurance Markets
The Predictive Validity of Subjective Probabilities of Survival
| Citations per year | 1 |
|---|---|
| Citation span | 2021 - 2026 (6) |
| Highly cited | No |