Abstract The “annuity puzzle” refers to the fact that annuities are rarely purchased despite longevity insurance they provide. Most explanations for this puzzle assume individuals have accurate expectations about their future survival. We provide evidence misperceive mortality risk and study demand in a setting where priced by insurers on basis of objectively-measured survival probabilities but...

The purpose of this paper is to study mortality-based securities, such as mortality bonds and swaps, and to price the proposed mortality securities. We focus on individual annuity data, although some of the modeling techniques could be applied to other lines of annuity or life insurance. Date: March 30, 2004. A very early version was presented at a seminar at the University of Waterloo, Departm...

This paper studies the role of social security in providing annuity insurance. I calculate the welfare cost of adverse selection in the annuity market using a life cycle model in which individuals have private information about their mortality. I calibrate the model to the current U.S. social security replacement ratio, fraction of annuitized wealth and mortality heterogeneity in the Health and...

Although consumer financial decision making has attracted renewed attention from marketing researchers, issues of consumer decumulation of retirement wealth have remained relatively unexplored. Research on decumulation presents an interesting problem for both behavioral and quantitative marketing researchers; it is a choice problem with large stakes, multiple sources of uncertainty, and difficu...

OBJECTIVES This study examines the wealth holdings of recent widows, how they compare to those of married couple households, and the potential to use this wealth to augment the incomes of widowed women. METHODS Data from the Survey of Income and Program Participation are used to investigate the amount and composition of wealth held by four different groups: always married women, about-to-be-w...