DEMAND FOR LIFE ANNUITIES FROM MARRIED COUPLES WITH A BEQUEST MOTIVE

Carlos Vidal-Melia () and Ana Lejárraga-García
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Ana Lejárraga-García: University of Valencia Spain

Public Economics from EconWPA

Abstract: This paper will try to explain the “annuities puzzle” in greater depth by introducing the bequest motive, both strategic and altruistic. It will try to determine whether this motive really is a relevant feature influencing the demand for lifetime annuities by married couples. With this aim in mind, we develop an optimization model of the utility provided by purchasing a lifetime annuity with contingent survivor benefit or a joint survivor life annuity. This will enable us to calculate equivalent wealth in various contexts: the possibility of access to actuarially fair annuity markets, the inclusion of so-called market imperfections, and the assumption that couples already have part of their wealth in pre-existing lifetime annuities. Results are presented for a model specification calibrated to Spain.

Keywords: Capitalization; Pension Funds; Retirement; Utility. (search for similar items in EconPapers)
JEL-codes: G23 H55 J26 (search for similar items in EconPapers)
Date: 2004-09-13
Note: Type of Document - pdf; pages: 22

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http://129.3.20.41/eps/pe/papers/0409/0409009.pdf (application/pdf)

Related works:
Working Paper: Demand for life annuities from married couples with a bequest motive
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0409009

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