How deep is the annuity market participation puzzle?

Paula Lopes, Alexander Michaelides and Joachim Inkmann ()
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Paula Lopes: Universidade Catolica Portuguesa

No 239, 2009 Meeting Papers from Society for Economic Dynamics

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, effects in a life-cycle model of annuity demand, saving and portfolio choice. Moreover, reasonable preference parameters predict annuity demand levels comparable to the data. For stockholders, a relatively strong bequest motive is sufficient to simultaneously generate balanced portfolios and low annuity demand.

Date: 2009
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Citations: View citations in EconPapers (3)

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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? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed009:239

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