Mortality heterogeneity and the distributional consequences of mandatory annuitization

Mortality heterogeneity and the distributional consequences of mandatory annuitization

Mortality heterogeneity and the distributional consequences of mandatory annuitization

Gong

Guan

Gong, Guan

Author

Author

Webb

Anthony

Webb, Anthony

Author

Author

text

working paper

Chestnut Hill, Mass. Center for Retirement Research at Boston College20062006monographic

Chestnut Hill, Mass.

Chestnut Hill, Mass.

Center for Retirement Research at Boston College

2006

2006

monographic

Englisheng

English

eng

electronicapplication/pdfborn digital

electronic

application/pdf

born digital

Using data from the Health and Retirement Study (HRS), we calculate the relationship between socio-economic status and a utility based measure of annuity value. We find considerable variation between groups once we take account of not only socio-economic differences in mortality, but also pre-annuitized wealth and longevity risk pooling in marriage.

Using HRS data on subjective survival probabilities, we then construct a subjective life table for each individual in the HRS. We show that these tables vary appropriately between groups and aggregate closely to group level averages. We calculate the value each household would place on annuitization, based on the husband and wife's subjective life tables, and the household's degree of risk-aversion and proportion of pre-annuitized wealth. A significant minority would perceive themselves as suffering a net loss from mandatory annuitization.

Guan Gong and Anthony Webb.

CRR WP2006-11

CRR WP2006-11

CRR WP

2006-11

http://crr.bc.edu/images/stories/Working_Papers/wp_2006-11.pdf

MChBEnglisheng

MChB

Englisheng

English

eng