Back to Search
Start Over
Why Don't People Insure Late Life Consumption: A Framing Explanation of the Under-Annuitization Puzzle
- Publication Year :
- 2008
-
Abstract
- Rational models of risk-averse consumers have difficulty explaining limited annuity demand. We posit that consumers evaluate annuity products using a narrow "investment frame" that focuses on risk and return, rather than a "consumption frame" that considers the consequences for lifelong consumption. Under an investment frame, annuities are quite unattractive, exhibiting high risk without high returns. Survey evidence supports this hypothesis: whereas 72 percent of respondents prefer a life annuity over a savings account when the choice is framed in terms of consumption, only 21 percent of respondents prefer it when the choice is framed in terms of investment features.
Details
- Database :
- OpenAIRE
- Accession number :
- edsair.dedup.wf.001..ac66da7607a0b4870368d6eda8ce4ce2