The Effect on Annuities Preference of Prompts to Consider Life Expectancy: Evidence from a UK Quota Sample

Robinson, J. A. G.; Comerford, David

doi:10.1111/ecca.12326

Cited by 4 publications

(1 citation statement)

References 37 publications

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“…Instead, the system involves pension funds paying out benefits instead of the government, the only difference being that the former can better assess life expectancy. See Benartzi et al (2011) and Robinson and Comerford (2019), among others, on the annuitization puzzle. 10.…”

Section: Discussionmentioning

confidence: 99%

Longevity Adjustment of Retirement Age and Intragenerational Inequality

Jensen

Sveinsson²,

Zoëga

2020

Economica

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We find that segments of society that have shorter life expectancy can expect a lower income from their pensions and lifetime utility due to the longevity of other groups participating in the same pension scheme. Linking the pension age to average life expectancy magnifies the negative effect on the lifetime utility of those who suffer low longevity. Furthermore, when the income of those with greater longevity increases, those with shorter life expectancy become even worse off. Conversely, when the income of those with shorter life expectancy increases, they end up paying more into the pension scheme, which benefits those who live longer. The relative sizes of the low‐ and high‐longevity groups in the population determine the magnitude of these effects. We calibrate the model based on data on differences in life expectancy of different socioeconomic groups and find that low‐income workers suffer from a 10–13% drop in pension benefits from being forced to pay into the same scheme as high‐income workers.

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Section: Discussionmentioning

confidence: 99%

Longevity Adjustment of Retirement Age and Intragenerational Inequality

Jensen

Sveinsson²,

Zoëga

2020

Economica

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Apparent age and gender differences in survival optimism: To what extent are they a bias in the translation of beliefs onto a percentage scale?

Comerford

2021

Judgm. decis. mak.

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A standard way to elicit expectations asks for the percentage chance an event will occur. Previous research demonstrates noise in reported percentages. The current research models a bias; a five percentage point change in reported probabilities implies a larger change in beliefs at certain points in the probability distribution. One contribution of my model is that it can parse bias in beliefs from biases in reports. I reconsider age and gender differences in Subjective Survival Probabilities (SSPs). These are generally interpreted as differences in survival beliefs, e.g., that males are more optimistic than females and older respondents are more optimistic than younger respondents. These demographic differences (in the English Longitudinal Study of Ageing) can be entirely explained by reporting bias. Older respondents are no more optimistic than younger respondents and males are no more optimistic than females. Similarly, in forecasting, information is obscured by taking reported percentages at face value. Accounting for reporting bias thus better exploits the private information contained in reports. Relative to a face-value specification, a specification that does this delivers improved forecasts of mortality events, raising the pseudo R-squared from less than 3 percent to over 6 percent.

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A: Financial Institutions

2020

World Banking Abstracts

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The Effect on Annuities Preference of Prompts to Consider Life Expectancy: Evidence from a UK Quota Sample

Cited by 4 publications

References 37 publications

Longevity Adjustment of Retirement Age and Intragenerational Inequality

Longevity Adjustment of Retirement Age and Intragenerational Inequality

Apparent age and gender differences in survival optimism: To what extent are they a bias in the translation of beliefs onto a percentage scale?

A: Financial Institutions

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