Framing Lifetime Income

Jeffrey Brown, Jeffrey Kling, Sendhil Mullainathan and Marian V. Wrobel

No 19063, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We provide evidence that individuals optimize imperfectly when making annuity decisions, and this result is not driven by loss aversion. Life annuities are more attractive when presented in a consumption frame than in an investment frame. Highlighting the purchase price in the consumption frame does not alter this result. The level of habitual spending has little interaction with preferences for annuities in the consumption frame. In an investment frame, consumers prefer annuities with principal guarantees; this result is similar for guarantee amounts below, at, and above the purchase price. We discuss implications for the retirement services industry and its regulators.

JEL-codes: J26 (search for similar items in EconPapers)
Date: 2013-05
Note: AG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published as Framing Lifetime Income Jeffrey R. Brown, Jeffrey R. Kling, Sendhil Mullainathan, and Marian V. Wrobel The Journal of Retirement Summer 2013, Vol. 1, No. 1: pp. 27-37 DOI: 10.3905/jor.2013.1.1.027 Framing Lifetime Income

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