What matters for annuity demand

Arapakis, Karolos, and Gal Wettstein. “What matters for annuity demand”. Issue in Brief 23-3, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, January 2023. http://hdl.handle.net/2345/bc-ir:109620.
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Abstract

The brief's key findings are: (1) Few people buy annuities, which has long puzzled researchers. (2) This study assesses the relative importance of two potential reasons for this low demand: (i) annuity prices are based on the longer objective life expectancy of those who buy them, making them expensive for others; and (ii) people in their 50s and 60s are too pessimistic about their life expectancy, so they place a lower value on annuities. (3) The results show both factors impact annuity demand, but objective life expectancy has a much larger effect than pessimism. (4) The implication is that a larger public role may be required to boost annuitization.

Title
What matters for annuity demand: Objective life expectancy or subjective survival pessimism?
Author
Arapakis, Karolos
Wettstein, Gal
Center
Center for Retirement Research
Genre
report
Date Issued
January 2023
Publisher
Center for Retirement Research at Boston College
Series Title
Issue in Brief
Series Number
23-3
Persistent Link
http://hdl.handle.net/2345/bc-ir:109620
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
Financing Retirement

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