How deep is the annuity market participation puzzle?

Joachim Inkmann (), Paula Lopes and Alexander Michaelides

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Using U.K. microeconomic data, we analyze the empirical determinants of voluntary annuity market demand. We find that annuity market participation increases with financial wealth, life expectancy and education and decreases with other pension income and a possible bequest motive for surviving spouses. We then show that these empirically-motivated determinants of annuity market participation have the same, quantitatively important, e¤ects in a life-cycle model of annuity demand, saving and portfolio choice. Moreover, reasonable preference parameters predict annuity demand levels comparable to the data, thereby questioning the conventional wisdom that limited annuity market participation is a puzzle to be explained.

Keywords: annuities; portfolio choice; bequest motive (search for similar items in EconPapers)
JEL-codes: E21 H00 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2007-07-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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http://eprints.lse.ac.uk/24488/ Open access version. (application/pdf)

Related works:
Journal Article: How Deep Is the Annuity Market Participation Puzzle? (2011)
Working Paper: How Deep is the Annuity Market Participation Puzzle? (2010)
Working Paper: How Deep is the Annuity Market Participation Puzzle? (2009)
Working Paper: How deep is the annuity market participation puzzle? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:24488

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