Wealth and the Effect of Subjective Survival Probability

Sanna Nivakoski (nivakoss@tcd.ie)

No 201509, Working Papers from Geary Institute, University College Dublin

Abstract: The life-cycle hypothesis predicts that longer life expectancy should, ceteris paribus, lead to the accumu- lation of more wealth during working life to fund consumption in retirement. The prediction is tested by examining whether subjective survival probability (SSP)- a proxy measure of self-assessed life ex- pectancy - affects wealth holdings among the pre-retirement older population. SSP is instrumented to address measurement error and reverse causality. The findings suggest that a 1 percentage point increase in the self-assessed probability of reaching age 75 increases an individual's financial wealth by approximately EUR 3,400 and total wealth (including pension wealth) by approximately EUR 6,200.

Keywords: financial wealth; pension wealth; life-cycle hypothesis; longevity; subjective survival probability (search for similar items in EconPapers)
JEL-codes: D14 D84 D91 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-06-03
New Economics Papers: this item is included in nep-age
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Persistent link: https://EconPapers.repec.org/RePEc:ucd:wpaper:201509

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