How Deep Is the Annuity Market Participation Puzzle?

• 成果类型: Article
• 署名作者: Inkmann, Joachim; Lopes, Paula; Michaelides, Alexander
• 署名单位: University of Melbourne; University of London; London School Economics & Political Science; University of Cyprus
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhq080
• 发表日期: 2011
• 页码: 279
• 关键词: portfolio choice; life-cycle; intertemporal substitution; individual annuities; asset allocation; bequest motives; united-kingdom; consumption; retirement; insurance

摘要

Using microeconomic data for the United Kingdom, 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 and life insurance demand, saving, and portfolio choice. Moreover, reasonable preference parameters predict annuity demand levels comparable to the data. For stockholders, a strong bequest motive can simultaneously generate balanced portfolios and low annuity demand.