YOLO: Mortality Beliefs and Household Finance Puzzles

• 成果类型: Article
• 署名作者: Heimer, Rawley Z.; Myrseth, Kristian Ove R.; Schoenle, Raphael S.
• 署名单位: Boston College; Trinity College Dublin; Brandeis University; Brandeis University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12828
• 发表日期: 2019
• 页码: 2957-2996
• 关键词: subjective probabilities; predictive-validity; social-security; life expectancy; Longevity risk; retirement; savings; expectations; consumption; frequency

摘要

We study the effect of subjective mortality beliefs on life-cycle behavior. With new survey evidence, we document that survival is underestimated (overestimated) by the young (old). We calibrate a canonical life-cycle model to elicited beliefs. Relative to calibrations using actuarial probabilities, the young undersave by 26%, and retirees draw down their assets 27% slower, while the model's fit to consumption data improves by 88%. Cross-sectional regressions support the model's predictions: Distorted mortality beliefs correlate with savings behavior while controlling for risk preferences, cognitive, and socioeconomic factors. Overweighting the likelihood of rare events contributes to mortality belief distortions.