{"id":7949,"date":"2023-07-23T08:02:38","date_gmt":"2023-07-23T12:02:38","guid":{"rendered":"https:\/\/creei.ca\/demand-for-annuities-price-sensitivity-risk-perceptions-and-knowledge\/"},"modified":"2023-11-23T13:28:48","modified_gmt":"2023-11-23T18:28:48","slug":"demand-annuities-price-sensitivity-risk-perceptions-knowledge","status":"publish","type":"page","link":"https:\/\/creei.ca\/en\/demand-annuities-price-sensitivity-risk-perceptions-knowledge\/","title":{"rendered":"Demand for Annuities: Price Sensitivity, Risk Perceptions, and Knowledge"},"content":{"rendered":"
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Short Summary:<\/div>\n
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To assess the reasons behind low demand for voluntary individual lifetime annuities, we designed an experiment with varying characteristics of annuity contracts, in order to estimate individuals\u2019 sensitivity to their value-to-cost ratio (or money\u2019s worth). Using different measures of objective longevity risk and subjective survival expectations, we investigate how product knowledge and mortality risk misperceptions affect the take-up of \u2013 as well as the sensitivity of the demand for \u2013 annuities. We find that annuities are not priced fairly, although they can appear to be fairly priced given an individual\u2019s subjective mortality risk. We also find that, given their current 10% take-up rate, lowering the price of annuities to fair actuarial levels could increase demand by at most 2 percentage points. Lack of knowledge of annuities explains another 1.2 percentage points.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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Publication Authors: M. Martin Boyer, S\u00e9bastien Box-Couillard et Pierre-Carl Michaud<\/div>\n<\/div>\n
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Number: 18-10<\/div>\n<\/div>\n
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File: \"\" cahier_18_10_demand_annuities_price_risk_knowledge.pdf<\/a><\/div>\n<\/div>\n
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Year: 2018<\/div>\n<\/div>\n
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*Scientific Publication: Journal of Economic Behavior & Organization, 180, 883-902. doi.org\/10.1016\/j.jebo.2019.03.022.<\/a><\/div>\n<\/div>\n<\/article>\n<\/div>\n<\/div>\n<\/div>
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