Tag: annuity puzzle
Introduction Since 1965, academics have argued that individuals should annuitize a large part of their wealth. However, for nearly as long, studies have documented that annuitization rates fall far short of what seem to be optimal levels. Researchers have proposed multiple explanations for this potentially sub-optimal outcome. This brief, based on a recent study, assesses…
Abstract Objective life expectancy and subjective survival pessimism (defined as the difference between objective and subjective life expectancy) may both affect the demand for annuities. The question this project answers is: how do these two explanations contribute to annuitization decisions in practice? To explore this question, the analysis estimates regression models that include objective lif…
