Social Security Programs and Retirement Around the World: Micro‐Estimation, edited by Jonathan Gruber and David A. Wise

Abstract

Moshe A. Milevsky is one of the most skillful and engaging writers of our profession. His recent book, notwithstanding its rather daunting title-The Calculus of Retirement Income-is refreshingly written in a conversational first person voice and surpasses the already high expectations that his previous work has fostered.Professor Milevsky does a remarkable job at melding several disciplines in his text: financial economics, insurance, mathematics, and actuarial science. The text serves as a bridge for actuaries into the world of finance, and for financial economists into the world of pensions, insurance, and actuarial science. This user-friendly bridge is not only a notable achievement but an essential step toward joining the insights achievable through the various disciplines and equipping researchers to make further advances in the fields of pensions and retirement income.Milevsky introduces and develops, from the financial economics perspective, the basic actuarial models that underlie the pricing and risk analysis of life-contingent annuities, pensions, and life insurance. He handles the mathematical and actuarial models so deftly that a person with a basic understanding of calculus and finance would find his text quite accessible. Moreover, he sprinkles his analysis with practical and witty examples (such as folk wisdom from the famous Brazilian playboy, the late Jorge Guinle) that demonstrate to the reader their relevance and analytical power of the tools presented.He introduces the challenges of rational wealth decumulation at retirement through the metaphor of a drunk gambler he once witnessed who exhibited a rather curious roulette wagering and waitress tipping strategy. Here is not the place to reveal the parallels he draws between the drunk gambler and the retiree facing investment and consumption decisions, but suffice it to say that they rivet the reader's attention and impel her to turn the next page. Next, he presents the demographics and economics of what has been termed the central policy concern of our time-providing retirement security for our aging populations. 1