Cohort mortality risk or adverse selection in annuity markets?

• 成果类型: Article
• 署名作者: Cannon, Edmund; Tonks, Ian
• 署名单位: University of Bristol; University of Bath
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2016.07.002
• 发表日期: 2016
• 页码: 68-81
• 关键词: Adverse selection; insurance markets; Annuities

摘要

We show that tests for adverse selection in annuity markets using prices are not identified. Within the UK annuity market, different annuity products create the potential for a Rothschild-Stiglitz separating equilibrium as different risk types could choose different annuities. Empirical analyses using the money's worth suggest that prices are indeed consistent with this explanation. However, we show that this pattern of annuity prices would also result from the actions of regulated annuity providers who must reserve against cohort mortality risk. Annuity products that might attract different consumer risk types also have different risks for the provider. (C) 2016 Elsevier B.V. All rights reserved.