Adverse Selection in the Annuity Market and the Role for Social Security

• 成果类型: Article
• 署名作者: Hosseini, Roozbeh
• 署名单位: Arizona State University; Arizona State University-Tempe
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/681593
• 发表日期: 2015
• 页码: 941-984
• 关键词: subjective probabilities; BEHAVIOR; IMPACT; cost

摘要

I study the role of social security in providing insurance when there is adverse selection in the annuity market. I calculate welfare gain from mandatory annuitization in the social security system relative to a laissez-faire benchmark, using a model in which individuals have private information about their mortality. I estimate large heterogeneity in mortality using the Health and Retirement Study. Despite that, I find small welfare gain from mandatory annuitization. Social security has a large effect on annuity prices because it crowds out demand by high-mortality individuals. Welfare gain would have been significantly larger in the absence of this effect.