What Determines Annuity Demand at Retirement&quest

Giuseppe Cappelletti, Giovanni Guazzarotti and Pietro Tommasino

The Geneva Papers on Risk and Insurance - Issues and Practice, 2013, vol. 38, issue 4, 777-802

Abstract: We study the determinants of the demand for annuities using survey data from Italy. Eliciting potential demand with an ad hoc question, we are able, contrary to most previous studies, to disentangle demand from supply-side effects. Our results highlight the do importance of wealth, impatience, education and financial literacy in shaping annuity demand. In particular, not only do poor people annuitise less; they are also characterised by a higher elasticity of annuity demand to prices. This result suggests that prices higher than those actuarially fair should concern policymakers and regulators not only on efficiency, but also on fairness grounds.

Date: 2013
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