Wealth and the effect of subjective survival probability

Sanna Nivakoski ()
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Sanna Nivakoski: University College Dublin

Journal of Population Economics, 2020, vol. 33, issue 2, No 9, 633-670

Abstract: Abstract The life cycle hypothesis predicts that a longer life expectancy should, ceteris paribus, lead to the accumulation of more wealth during a 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 expectancy—affects retirement wealth among the pre-retirement older population in Ireland. The estimated relationship is complicated due to the correlation between SSP and life table estimates of life expectancy. SSP is instrumented to address measurement error and reverse causality. The findings suggest that a higher SSP increases retirement wealth.

Keywords: Financial wealth; Pension wealth; Life cycle hypothesis; Longevity; Subjective survival probability; Retirement savings (search for similar items in EconPapers)
JEL-codes: D14 D84 D91 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s00148-019-00749-2

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