More on the Origin of Financial Economics: Early Contributions to Joint Life Annuity Valuation

Geoffrey Poitras

No ak6gu, SocArXiv from Center for Open Science

Abstract: The origin of modern financial economics can be traced to early discounted expected value solutions for the price of life annuities. In contrast to the single life annuity valuations attributed to de Witt and Halley, the computational complexity of joint life annuity valuation posed difficulties. Following a brief review of various joint life annuity specifications, a history of joint life annuity issuance and valuation in northern Europe from the 13th to the mid-18th century is provided. With this background, the 1671 correspondence from de Witt to Hudde on possible methods for valuing joint life annuities is detailed. These methods are contrasted with the geometric method described in Halley (1693); providing impetus for examination of the analytical approximations developed by de Moivre and Simpson.

Date: 2024-08-29
New Economics Papers: this item is included in nep-his and nep-hpe
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Working Paper: More on the Origin of Financial Economics: Early Contributions to Joint Life Annuity Valuation (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:ak6gu

DOI: 10.31219/osf.io/ak6gu

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