April 11, 2019
A. “Population Aging, Age Discrimination, and Age Discrimination Protections at the 50th Anniversary of the Age Discrimination in Employment Act,” by Patrick Button (Discussion Paper No. 12265, March 2019, .pdf format, 30p.). Note: Links to the abstract and the full text of this paper available at:
www.iza.org/publications/dp/12265
B. “Responding to Regulation: The Effects of Changes in Mandatory Retirement Laws on Firm-Provided Incentives,” by Anders Frederiksen and Colleen Flaherty Manchester (Discussion Paper No. 12264, March 2019, .pdf format, 42p.). Note: Links to the abstract and the full text of this paper available at:
www.iza.org/publications/dp/12264
C. “Behavioral Impediments to Valuing Annuities: Complexity and Choice Bracketing,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F.P. Luttmer, Olivia S. Mitchell, and Anya Samek (Discussion Paper No. 12263, March 2019, .pdf format, 34p.). Note: Links to the abstract and the full text of this paper available at:
www.iza.org/publications/dp/12263
D. “Voluntary Job Separations and Traditional versus Flexible Workplace Saving Plans: Evidence from Canada,” by Tony Fang and Derek Messacar (Discussion Paper No. 12262, March 2019, .pdf format, 46p.). Note: Links to the abstract and the full text of this paper available at:
www.iza.org/publications/dp/12262
E. “Endogenous Demographic Change, Retirement and Social Security,” by Giam Pietro Cipriani and Tamara Fioroni (Discussion Paper No. 12244, March 2019, .pdf format, 24p.). Note: Links to the abstract and the full text of this paper available at:
www.iza.org/publications/dp/12244
Comments Off on CAAR – Institute for the Study of Labor (IZA) [University of Bonn, Germany] Working Papers – April 11, 2019
“Variable Annuities: Underlying Risks and Sensitivities Variable Annuities: Underlying Risks and Sensitivities,” by Imad Chahboun and Nathaniel Hoover (Supervisory Research and Analysis Working Paper 19-1, April 2019, .pdf format, 39p.). Note: Links to the abstract and the full text of this paper available at:
www.bostonfed.org/publications/risk-and-policy-analysis/2019/variable-annuities-underlying-risks-and-sensitivities.aspx
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March 19, 2019
“Behavioral Impediments to Valuing Annuities: Complexity and Choice Bracketing,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F. P. Luttmer, Olivia S. Mitchell, and Anya Samek (WP2019-5, February 2019, .pdf format, 34p.).
pensionresearchcouncil.wharton.upenn.edu/wp-content/uploads/2019/03/WP-2019-5-Brown-et-al.pdf
Comments Off on CAAR – University of Pennsylvania, Wharton School, Pension Research Council Working Paper – March 19, 2019
February 7, 2019
“Survival pessimism and the demand for annuities,” by Cormac O’Dea and David Sturrock (WP19/02, January 2019, .pdf format, 28p.). Note: Links to the abstract and the full text of the paper available at:
www.ifs.org.uk/publications/13815
Comments Off on CAAR – Institute for Fiscal Studies [UK] Working Paper – February 7, 2019
January 10, 2019
A. “Competition, Asymmetric Information, and the Annuity Puzzle: Evidence from a Government-Run Exchange in Chile,” by Gastón Illanes and Manisha Padi (WP No. 2019-2, January 2019, .pdf format, 60p.). Note: Links to the abstract and the full text of the paper available at:
Competition, Asymmetric Information, and the Annuity Puzzle: Evidence from a Government-Run Exchange in Chile
B. “Failure to Contribute: An Estimate of the Consequences of Non- and Underpayment of Self-Employment Taxes by Independent Contractors and On-Demand Workers on Social Security,” by Caroline Bruckner and Thomas L. Hungerford (WP No. 2019-1, January 2019, .pdf format, 40p.). Note: Links to the abstract and the full text of the paper available at:
Failure to Contribute: An Estimate of the Consequences of Non- and Underpayment of Self-Employment Taxes by Independent Contractors and On-Demand Workers on Social Security
Comments Off on CAAR – Center for Retirement Research at Boston College Working Papers – January 10, 2019
January 3, 2019
“Deferred Income Annuity Purchases: Optimal Levels for Retirement Income Adequacy,” by Jack VanDerhei (January 2019, .pdf format, 19p.). Note: Registration is required to access content at EBRI.
www.ebri.org/content/deferred-income-annuity-purchases-optimal-levels-for-retirement-income-adequacy
Comments Off on CAAR – Employee Benefit Research Institute Issue Brief – January 3, 2019
December 10, 2018
Links to an abstract are available. For full text availability check your organization’s library.
A. “Annuity Pricing in Public Pension Plans: Importance of Interest Rates,” by Nino Abashidze, Robert L. Clark, Beth Ritter, and David Vanderweide (w25343, December 2018, .pdf format, 37p.).
www.nber.org/papers/w25343
B. “The Effects of Medicare Advantage on Opioid Use,” by Laurence C. Baker, Kate Bundorf, and Daniel Kessler (w25327, December 2018, .pdf format, 28p.).
www.nber.org/papers/w25327
C. “The Long-run Impact of New Medical Ideas on Cancer Survival and Mortality,” by Frank R. Lichtenberg (w25328, December 2018, .pdf format, 19p.).
www.nber.org/papers/w25328
D. “Two Hundred Years of Health and Medical Care: The Importance of Medical Care for Life Expectancy Gains,” by Maryaline Catillon, David Cutler, and Thomas Getzen (w25330, December 2018, .pdf format, 56p.).
www.nber.org/papers/w25330
E. “The Effect of Economic Conditions on the Disability Insurance Program: Evidence from the Great Recession,” by Nicole Maestas, Kathleen J. Mullen, and Alexander Strand (w25338, December 2018, .pdf format, 33p.).
www.nber.org/papers/w25338
Comments Off on CAAR – National Bureau of Economic Research Working Papers – December 10, 2018
October 11, 2018
Links to an abstract are available. For full text availability check your organization’s library.
A. “Happiness at Different Ages: The Social Context Matters,” by John F. Helliwell, Max B. Norton, Haifang Huang, and Shun Wang (w25121, October 2018, .pdf format, 36p.).
www.nber.org/papers/w25121
B. “Navigating Complex Financial Decisions at Retirement: Evidence from Annuity Choices in Public Sector Pensions,” by Robert L. Clark, Robert G. Hammond, and David Vanderweide (w25129, October 2018, .pdf format, 34p.).
www.nber.org/papers/w25129
C. “Fatal Attraction? Extended Unemployment Benefits, Labor Force Exits, and Mortality,” by Andreas Kuhn, Stefan Staubli, Jean-Philippe Wuellrich, and Josef Zweimüller (w25124, October 2018, .pdf format, 42p.).
www.nber.org/papers/w25124
D. “How Will Persistent Low Expected Returns Shape Household Economic Behavior?” by Vanya Horneff, Raimond Maurer, and Olivia S. Mitchell (w25133, October 2018, .pdf format, 20p.).
www.nber.org/papers/w25133
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September 25, 2018
Links to an abstract are available. For full text availability check your organization’s library.
A. “The Pivotal Role of Fairness: Which Consumers Like Annuities?” by Suzanne B. Shu, Robert Zeithammer, and John W. Payne (w25067, September 2018, .pdf format, 23p.).
www.nber.org/papers/w25067
B. “The Chinese Pension System,” by Hanming Fang and Jin Feng (w25088, September 2018, .pdf format, 40p.).
www.nber.org/papers/w25088
Comments Off on CAAR – National Bureau of Economic Research Working Papers – September 25, 2018
April 4, 2018
“Could “Tontines” Expand the Market for Longevity Insurance?” by Gal Wettstein (IB No. 18-7, April 2018, .pdf format, 5p.).
Could “Tontines” Expand the Market for Longevity Insurance?
Comments Off on CAAR – Center for Retirement Research at Boston College Issue Brief – April 4, 2018
December 11, 2017
Links to an abstract are available. For full text availability check your organization’s library. “Behavioral Impediments to Valuing Annuities: Evidence on the Effects of Complexity and Choice Bracketing,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F.P. Luttmer, Olivia S. Mitchell, and Anya Samek (w24101, December 2017, .pdf format, 32p.).
www.nber.org/papers/w24101
Comments Off on CAAR – National Bureau of Economic Research Working Paper – December 11, 2017
August 17, 2017
Links to an abstract are available. For full text availability check your organization’s library.
A. “Debt and Financial Vulnerability on the Verge of Retirement,” by Annamaria Lusardi, Olivia S. Mitchell, and Noemi Oggero (w23664, August 2017, .pdf format, 41p.).
www.nber.org/papers/w23664
B. “Survival Ambiguity and Welfare,” by Frank N. Caliendo, Aspen Gorry, and Sita Slavov (w23668, August 2017, .pdf format, 34p.).
www.nber.org/papers/w23648
Comments Off on CAAR – National Bureau of Economic Research Working Papers – August 17, 2017
February 9, 2017
“How Does the Level of Household Savings Affect Preference for Immediate Annuities?” by Sudipto Banerjee (Issue Brief No. 430, February 2017, .pdf format, 20p.).
www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=3415
Comments Off on CAAR – Employee Benefits Research Institute Issue Brief – February 9, 2017
December 8, 2016
Note: Free registration is required to access any content.
A. “Older Peoples’ Willingness to Delay Social Security Claiming,” by Raimond Maurer and Olivia S. Mitchell (WP2016-10, December 2016, .pdf format, 21p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1351
B. “Putting the Pension Back in 401(k) Plans: Optimal versus Default Longevity Income Annuities,” by Vanya Horneff, Raimond Maurer, and Olivia S. Mitchell (WP2016-9, September 2016, .pdf format, 36p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1349
Comments Off on CAAR – University of Pennsylvania, Wharton School, Pension Research Council Working Papers- December 8, 2016
October 10, 2016
Note: Free registration is required to access any content.
A. “Removing the Legal Impediments to Offering Lifetime Annuities in Pension Plans,” by Jonathan Barry Forman (WP2016-6, August 2016, .pdf format, 54p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1347
B. “Research Report from the INPARR Conference on Research Challenges for Global Pensions: Trends and Heterogeneity,” by Julie Agnew, Olivia S. Mitchell, John Piggott, James Nazroo, Monika Butler, Theo Nijman, Jessica Mosher, Phyllis Borzi, Agar Brugiavini, Satoshi Shimizutani, and David McCarthy (WP2016-08, August 2016, .pdf format, 15p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1348
Comments Off on CAAR – University of Pennsylvania, Wharton School, Pension Research Council Working Papers – October 10, 2016
September 23, 2016
“Secondary annuities market,” by Djuna Thurley (CBP-7707, September 2016, .pdf format, 22p.).
researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-7707
Comments Off on CAAR – UK House of Commons Library Briefing Paper – September 23, 2016
August 10, 2016
A. “How Job Options Narrow for Older Workers by Socioeconomic Status,” by Matthew S. Rutledge, Steven A. Sass and Jorge D. Ramos-Mercado (IB No. 16-13, August 2016, .pdf format, 6p.).
crr.bc.edu/briefs/how-job-options-narrow-for-older-workers-by-socioeconomic-status/
B. “How Can We Realize the Value That Annuities Offer in a 401(k) World?” by Steven A. Sass (IB No. 16-12, July 2016, .pdf format, 9p.).
crr.bc.edu/briefs/how-can-we-realize-the-value-that-annuities-offer-in-a-401k-world/
Comments Off on CAAR – Center for Retirement Research at Boston College Issue Briefs – August 10, 2016
November 12, 2015
“Pension Pots and How to Survive Them,” by Les Mayhew, David Smith, and Douglas Wright (November 2015, .pdf format, 31p.).
www.ilcuk.org.uk/index.php/publications/publication_details/pension_pots_and_how_to_survive_them
Comments Off on CAAR – International Longevity Centre [UK] Report – November 12, 2015
September 2, 2015
EBRI Notes (Vol. 36, No. 8, August 2015, .pdf format). Note: The articles in this issue are: “Investment Options and HSAs: Findings from the EBRI HSA Database,” by Paul Fronstin; and, “How Much Can Qualifying Longevity Annuity Contracts Improve Retirement Security?” by Jack VanDerhei.
www.ebri.org/publications/notes/index.cfm?fa=notesDisp&content_id=3264
Comments Off on CAAR – Employee Benefit Research Institute Periodical – September 2, 2015
Note: Free registration is required to access any content.
A. “Risk Disclosure in the European Insurance Industry: Implications for Occupational Pension Funds,” by Karel Van Hulle (WP2015-17, August 2015, .pdf format, 42p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1284
B. “Mark-to-Market Accounting for United States Corporate Pensions: Implementation and Impact,” by Joseph Busillo, Thomas Harvey, and Bryan Hoffman (WP2015-16, August 2015, .pdf format, 27p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1283
C. “Accounting-based Asset Return Smoothing in Participating Life Annuities: Implications for Annuitants, Insurers, and Policymakers,” by Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla, and Ivonne Siegelin (WP2015-15, August 2015, .pdf format, 18p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1282
D. “The New Insurance Supervisory Landscape: Implications for Insurance and Pensions,” by Peter A. Fisher (WP2015-14, August 2015, .pdf format, 39p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1281
E. “Implications of the New Regulatory Order for Retirement System Risk Management,” by Olivia S. Mitchell, Raimond Maurer, and J. Michael Orszag (WP2015-13, August 2015, .pdf format, 13p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1280
F. “The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings,” by Gopi Shah Goda, Matthew R. Levy, Colleen Flaherty Manchester, Aaron Sojourner, and Joshua Tasoff (WP2015-11, August 2015, .pdf format, 93p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1278
Comments Off on CAAR – University of Pennsylvania, Wharton School, Pension Research Council Working Papers – September 2, 2015
June 22, 2015
A. “Sources of Increasing Differential Mortality Among the Aged by Socioeconomic Status,” by Barry P. Bosworth, Gary Burtless and Kan Zhang (WP No. 2015-10, June 2015, .pdf format, 33p.). Note: Links to the abstract and the full text of the paper available at:
crr.bc.edu/working-papers/sources-of-increasing-differential-mortality-among-the-aged-by-socioeconomic-status/
B. “Do Retired Americans Annuitize Too Little? Trends in the Share of Annuitized Income,” by by Barry P. Bosworth, Gary Burtless and Mattan Alalouf (WP No. 2015-09, June 2015, .pdf format, 45p.). Note: Links to the abstract and the full text of the paper available at:
crr.bc.edu/working-papers/do-retired-americans-annuitize-too-little-trends-in-the-share-of-annuitized-income/
C. “Impact of the Financial Crisis on Long-Term Growth,” by Barry P. Bosworth (WP No. 2015-08, June 2015, .pdf format, 26p.). Note: Links to the abstract and the full text of the paper available at:
crr.bc.edu/working-papers/impact-of-the-financial-crisis-on-long-term-growth/
D. “Post-War Trends in Labor Income in the Social Security Earnings Records,” by Gary Burtless and Kan Zhang (WP No. 2015-07, June 2015, .pdf format, 25p.). Note: Links to the abstract and the full text of the paper available at:
crr.bc.edu/working-papers/post-war-trends-in-labor-income-in-the-social-security-earnings-records/
E. “Improving Employees’ Life and Disability Insurance Benefit Decisions: Results of an Employer Survey,” by Anek Belbase, Norma B. Coe and Matthew S. Rutledge (WP No. 2015-06, June 2015, .pdf format, 54p.). Note: Links to the abstract and the full text of the paper available at:
crr.bc.edu/working-papers/improving-employees-life-and-disability-insurance-benefit-decisions-results-of-an-employer-survey/
Comments Off on CAAR – Center for Retirement Research at Boston College Working Papers – June 22, 2015
March 31, 2015
“Are Cognitive Constraints a Barrier to Annuitization?” by Jeffrey R. Brown, Arie Kapteyn, Erzo F.P. Luttmer and Olivia S. Mitchell (IB 15-06, March 2015, .pdf format, 7p.).
crr.bc.edu/briefs/are-cognitive-constraints-a-barrier-to-annuitization/
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March 23, 2015
Note: PRC requires free registration before providing working papers. “Cognitive Constraints on Valuing Annuities,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F. P. Luttmer, and Olivia S. Mitchell (WP2015-04, March 2015, .pdf format, 33p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1258
Comments Off on CAAR – University of Pennsylvania, Wharton School, Pension Research Council Working Paper – March 23, 2015
November 6, 2014
“Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities,” by Katharine G. Abraham and Benjamin H. Harris (November 2014, .pdf format, 20p.). Note: Links to the abstract and the full text of the paper available at:
www.brookings.edu/research/papers/2014/11/06-retirement-longevity-annuities-harris
Comments Off on CAAR – Brookings Institution Paper – November 6, 2014
October 6, 2014
Links to an abstract are available. For full text availability check your organization’s library.
A. “Distributional Effects of Means Testing Social Security: An Exploratory Analysis,” by Alan Gustman, Thomas Steinmeier, and Nahid Tabatabai (w20546, October 2014, .pdf format, 40p.).
www.nber.org/papers/w20546
B. “Annuitized Wealth and Post-Retirement Saving,” by John Laitner, Daniel Silverman, and Dmitriy Stolyarov (w20547, October 2014, .pdf format, 32p.).
www.nber.org/papers/w20547
C. “Insurance Markets for the Elderly,” by Hanming Fang (w20549, October 2014, .pdf format, 83p.).
www.nber.org/papers/w20549
D. “The Perception Of Social Security Incentives For Labor Supply And Retirement: The Median Voter Knows More Than You’d Think,” by Jeffrey B. Liebman and Erzo F.P. Luttmer (w20562, October 2014, .pdf format, 40p.).
www.nber.org/papers/w20562
Comments Off on CAAR – National Bureau of Economic Research Working Paper – October 6, 2014
Note: PRC requires free registration before providing working papers.
“Cognitive Constraints on Valuing Annuities,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F.P. Luttmer, and Olivia S. Mitchell (WP2014-21, October 2014, .pdf format, 31p.). Note: Links to the abstract and the full text of the paper available at:
www.pensionresearchcouncil.org/publications/document.php?file=1215
Comments Off on CAAR – Pension Research Council, Wharton School, University of Pennsylvania Working Paper – October 6, 2014
September 15, 2014
Note: PRC requires free registration before providing working papers.
“Optimal Portfolio Choice in Retirement with Participating Life Annuities,” by Ralph Rogalla (WP2014-20, September 2014, .pdf format, 31p.).
www.pensionresearchcouncil.org/publications/document.php?file=1209
Comments Off on CAAR – Pension Research Council, Wharton School, University of Pennsylvania Working Paper – September 15, 2014
August 4, 2014
Links to an abstract are available. For full text availability check your organization’s library. “Riding the Bubble? Chasing Returns into Illiquid Assets,” by Danny Yagan (w20360, August 2014, .pdf format, 25p.).
www.nber.org/papers/w20360
Comments Off on CAAR – National Bureau of Economic Research Working Paper – August 4, 2014
July 31, 2014
A. “The Consequences of Not Having to Buy an Annuity,” by David Burke (PI-1409, June 2014, .pdf format, 14p.). Note: There is no abstract for this paper.
www.pensions-institute.org/workingpapers/wp1409.pdf
B. “The Future of Retirement Income: Retirement income after the 2014 Budget,” by Debbie Harrison and David Blake (July 2014, .pdf format, 38p.).
www.pensions-institute.org/reports/Futureofretirementincome.pdf
Comments Off on CAAR – Pensions Institute Working Paper, Report – July 31, 204
July 25, 2014
Comments Off on CAAR – International Longevity Centre [UK] Report – July 25, 2014
July 17, 2014
“A Proposal to Increase Annuitization of 401(k) Wealth Using Automatic Features,” by William G. Gale (July 2014, .pdf format, 9p.).
www.brookings.edu/research/presentations/2014/07/14-increase-annuitization-of-401k-gale
Comments Off on CAAR – Brookings Institution Presentation – July 17, 2014
June 11, 2014
“Stimulating Annuity Markets,” by Ben J. Heijdra, Jochen O. Mierau, and Timo Trimborn (CESifo Working Paper No. 4827, June 2014, .pdf format, 31p.). Note: Links to the abstract and full-text can be found at:
www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19112534
Comments Off on CAAR – Center for Economic Studies/Ifo Institute for Economic Research (CESifo) [Munich, Bavaria, Germany] Working Paper – June 11, 2014
March 3, 2014
Note: PRC requires free registration before providing working paper.
“Accounting and Actuarial Smoothing of Retirement Payouts in Participating Life Annuities,” by Raimond Maurer, Olivia S. Mitchell, Ralph Rogalla, and Ivonne Siegelin (WP2014-02, February 2014, .pdf format, 43p.).
Abstract:
Life insurers use accounting and actuarial techniques to smooth reporting of firm assets and liabilities, seeking to transfer surpluses in good years to cover benefit payouts in bad years. Yet these techniques been criticized as they make it difficult to assess insurers’ true financial status. We develop stylized and realistically-calibrated models of participating lifetime annuities, an insurance product that pays retirees guaranteed lifelong benefits along with variable nonguaranteed surplus. Our goal is to illustrate how accounting and actuarial techniques for this product shape policyholder wellbeing as well as insurer profitability and stability. We show that smoothing adds value to both the annuitant and the insurer, so curtailing smoothing could undermine the market for long-term retirement payout products.
www.pensionresearchcouncil.org/publications/document.php?file=1168
Comments Off on CAAR – Pension Research Council, Wharton School, University of Pennsylvania Working Paper – March 3, 2014
September 11, 2013
“Longevity Insurance Annuities: Lessons from the United Kingdom,” David Blake and John A. Turner (PI13-05, July 2013, .pdf format, 12p.).
Abstract:
Recent U.S. Treasury Department proposals have focused attention on longevity insurance annuities. These are deferred annuities that began payment at advanced older ages, such as at age 82. While the United Kingdom has by far the world’s largest annuity market, and some insurance companies used to provide longevity insurance annuities, currently no companies provide these annuities. The main reason this change has occurred is that proposed European Union regulations will require insurance companies to increase their reserves for these annuities in recognition that there is no asset available to effectively hedge the risk of unexpectedly large improvements in life expectancy.
www.pensions-institute.org/workingpapers/wp1305.pdf
Comments Off on CAAR – Pensions Institute (Cass Business School, City University of London) [UK] Working Paper – September 11, 2013
July 30, 2013
A. “Optimal Life Cycle Portfolio Choice with Variable Annuities Offering Liquidity and Investment Downside Protection,” by Vanya Horneff, Raimond H. Maurer, Olivia S. Mitchell and Ralph Rogalla (WP 2013-286, June 2013, .pdf format, 30p.). Note: Links to the abstract and full-text can be found at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=902
B. “Representativeness of the Low-Income Population in the Health and Retirement Study,” by Erik Meijer and Lynn Karoly (WP 2013-273, July 2013, .pdf format, 33p.). Note: Links to the abstract and full-text can be found at:
www.mrrc.isr.umich.edu/publications/index_abstract.cfm?ptid=1&pid=904
Comments Off on CAAR – University of Michigan Retirement Research Center Working Papers – July 30, 2013
July 15, 2013
A. “Optimal Life Cycle Portfolio Choice with Variable Annuities Offering Liquidity and Investment Downside Protection,” by Vanya Horneff, Raimond Maurer, Olivia S. Mitchell, and Ralph Rogalla (w19206, July 2013, .pdf format, 39p.).
Abstract:
We evaluate lifecycle consumption and portfolio allocation patterns resulting from access to Guaranteed Minimum Withdrawal Benefit (GMWB) variable annuities, one of the most rapidly-growing financial innovations over the last two decades. A key feature of these products is that they offer access to equity investments with downside protection, hedging of longevity risk, and partially-refundable premiums. Welfare rises since policyholders exercise the product’s flexibility by taking withdrawals and dynamically adjusting their portfolios and consumption streams. Consistent with observed behavior, differences across individuals’ cash out and annuitization patterns result from variations in realized equity market returns and labor income trajectories.
www.nber.org/papers/w19206
B. “Optimal Annuitization with Stochastic Mortality Probabilities,” by Felix Reichling and Kent Smetters (w19211, July 2013, .pdf format, 39p.).
Abstract:
The conventional wisdom dating back to Yaari (1965) is that households without a bequest motive should fully annuitize their investments. Numerous market frictions do not break this sharp result. We modify the Yaari framework by allowing a household’s mortality risk itself to be stochastic. Annuities still help to hedge longevity risk, but they are now subject to valuation risk. Valuation risk is a powerful gateway mechanism for numerous frictions to reduce annuity demand, even without ad hoc ‘liquidity constraints.’ We find that most households should not annuitize any wealth. The optimal level of aggregate net annuity holdings is likely even negative.
www.nber.org/papers/w19211
C. “Did Age Discrimination Protections Help Older Workers Weather the Great Recession?” by David Neumark and Patrick Button (w19216, July 2013, .pdf format, 22p.).
Abstract:
We examine whether stronger age discrimination laws at the state level moderated the impact of the Great Recession on older workers. We use a difference-in-difference-in-differences strategy to compare older workers in states with stronger and weaker laws, to their prime-age counterparts, both before, during, and after the Great Recession. We find very little evidence that stronger age discrimination protections helped older workers weather the Great Recession, relative to younger workers. The evidence sometimes points in the opposite direction, with stronger state age discrimination protections associated with more adverse effects of the Great Recession on older workers. We suggest that this may be because stronger age discrimination laws protect older workers in normal times, but during an experience like the Great Recession severe labor market disruptions make it difficult to discern discrimination, weakening the effects of stronger state age discrimination protections.
www.nber.org/papers/w19216
Comments Off on CAAR – National Bureau of Economic Research Working Papers – July 15, 2013
July 1, 2013
A. “Decision Complexity as a Barrier to Annuitization,” by Jeffrey R. Brown, Arie Kapteyn, Erzo F.P. Luttmer, and Olivia S. Mitchell (w19168, June 2013, .pdf format, 37p.).
Abstract:
We show that people have difficulty valuing annuities, and this, instead of a preference for lumpsums, helps explain observed low annuity demand. Although the median price at which people are willing to sell an annuity stream is close to the actuarial value, many responses diverge greatly from optimizing behavior. Moreover, people will pay substantially less to buy than to sell annuities. We conclude that boundedly rational consumers adopt “buy low, sell high” heuristics when confronting a complex trade-off. This suggests that many consumers do not make optimizing decisions, underscoring the difficulty of explaining cross-sectional annuity valuation differences using standard models.
www.nber.org/papers/w19168
B. “Evolving Choice Inconsistencies in Choice of Prescription Drug Insurance,” by Jason Abaluck and Jonathan Gruber (w19163, June 2013, .pdf format, 47p.).
Abstract:
We explore choice inconsistency over time within the Medicare Part D Prescription Drug Program. Using the full universe of Part D claims data, we revisit our earlier work on partial data to replicate our results showing large “foregone savings” among Part D enrollees. We also document that this foregone savings increases over time during the first four years of the Part D program. We then develop a rich dynamic structural framework that allows us to mathematically decompose the “foregone welfare” from inconsistent plan choices into components due to demand side factors, supply side factors, and changes in preferences over time. We find that the welfare cost of choice inconsistencies increases over time. Most importantly, we find that there is little improvement in the ability of consumers to choose plans over time; we identify and estimate little learning at either the individual or cohort level over the years of our analysis. Inertia does reduce welfare, but even in a world with no inertia we estimate that substantial welfare losses would remain. We conclude that the increased choice inconsistencies over time are driven by changes on the supply side that are not offset both because of inertia and because non-inertial consumers still make inconsistent choices.
www.nber.org/papers/w19163
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Note: PRC requires free registration before providing working papers.
“Optimal Life Cycle Portfolio Choice with Variable Annuities Offering Liquidity and Investment Downside Protection,” by Vanya Horneff, Olivia S. Mitchell, Raimond Maurer, and Ralph Rogalla (WP 2013-04, June 2013, .pdf format, 39p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1107
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May 28, 2013
A. “Effects of Social Security Policies on Benefit Claiming, Retirement and Saving,” by Alan L. Gustman and Thomas L. Steinmeier (w19071, May 2013, .pdf format, 40p.).
Abstract:
An enhanced version of a structural model jointly explains benefit claiming, wealth and retirement, including reversals from states of lesser to greater work. The model includes stochastic returns on assets. Estimated with Health and Retirement Study data, it does a better job of predicting claiming than previous versions. Alternative beliefs about the future of Social Security affect predicted outcomes. Effects of three potential policies are also examined: increasing the early entitlement age, increasing the full retirement age, and eliminating the payroll tax for seniors. Predicted responses to increasing the full entitlement age are sensitive to beliefs.
www.nber.org/papers/w19071
B. “The Spillover Effects of Medicare Managed Care: Medicare Advantage and Hospital Utilization,” by Katherine Baicker, Michael Chernew, and Jacob Robbins (w19070, May 2013, .pdf format, 39p.).
Abstract:
More than a quarter of Medicare beneficiaries are enrolled in Medicare Advantage, which was created in large part to improve the efficiency of health care delivery by promoting competition among private managed care plans. This paper explores the spillover effects of the Medicare Advantage program on the traditional Medicare program and other patients, taking advantage of changes in Medicare Advantage payment policy to isolate exogenous increases in Medicare Advantage enrollment and trace out the effects of greater managed care penetration on hospital utilization and spending throughout the health care system. We find that when more seniors enroll in Medicare managed care, hospital costs decline for all seniors and for commercially insured younger populations. Greater managed care penetration is not associated with fewer hospitalizations, but is associated with lower costs and shorter stays per hospitalization. These spillovers are substantial – offsetting more than 10% of increased payments to Medicare Advantage plans.
www.nber.org/papers/w19070
C. “Framing Lifetime Income,” by Jeffrey R. Brown, Jeffrey R. Kling, Sendhil Mullainathan, and Marian V. Wrobel (w19063, May 2013, .pdf format, 22p.).
Abstract:
We provide evidence that individuals optimize imperfectly when making annuity decisions, and this result is not driven by loss aversion. Life annuities are more attractive when presented in a consumption frame than in an investment frame. Highlighting the purchase price in the consumption frame does not alter this result. The level of habitual spending has little interaction with preferences for annuities in the consumption frame. In an investment frame, consumers prefer annuities with principal guarantees; this result is similar for guarantee amounts below, at, and above the purchase price. We discuss implications for the retirement services industry and its regulators.
www.nber.org/papers/w19063
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April 25, 2013
“Cohort mortality risk or adverse selection in the UK annuity market?” by Edmund Cannon and Ian Tonks (PI-1304, April 2013, .pdf format, 42p.).
Abstract:
The “money’s worth” measure has been used to assess whether annuities are fairly valued and also as evidence for adverse selection in the annuity market. However, a regulated life assurer with concerns about predicting long-run mortality may price annuities to reduce these risks which will affect the money’s worth. We provide a simple model of the effect of cohort mortality risk on the money’s worth. We demonstrate that cohort mortality risk is quantitatively important, and show that it is not possible to identify the effect of a cohort mortality risk model from that of an adverse selection model.
www.pensions-institute.org/workingpapers/wp1304.pdf
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April 8, 2013
“Adjusted Money’s Worth Ratios In Life Annuities,” by Jaime Casassus and Eduardo Walker (PI-1303, February 2013, .pdf format, 53p.).
Abstract:
The Money’s Worth Ratio (MWR) measures an annuity’s actuarial fairness. It is calculated as the discounted present value of the annuity’s expected future payments divided by its cost. We argue that, this measure may overestimate the value-for-money obtained by annuitants, since it does not adjust for liquidity or risk factors. Measuring these factors is challenging, requiring detailed knowledge of the annuity provider’s assets, liabilities, and of the stochastic processes followed by them. Using a multi-factor continuous-time model and option pricing theory, we propose a simple solution for an Adjusted MWR (AMWR), which does consider illiquidity and default risk. We implement this solution for the competitive Chilean annuity market, which offers unadjusted MWRs above 1, finding that indeed these ratios are biased upward 7 percent on average. We also present estimates of default option values, asset insufficiency probabilities and implied credit spreads for each annuity provider.
www.pensions-institute.org/workingpapers/wp1303.pdf
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April 2, 2013
A. “The Economic Importance of Financial Literacy: Theory and Evidence,” by Annamaria Lusardi and Olivia S. Mitchell (WP2013-02, March 2013, .pdf format, 63p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1040
B. “Complexity as a Barrier to Annuitization: Do Consumers Know How to Value Annuities?” by Jeffrey R. Brown, Arie Kapteyn, Erzo F. P. Luttmer, and Olivia S. Mitchell (WP2013-01, March 2013, .pdf format, 50p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1040
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January 9, 2013
“Retirement Security: Annuities with Guaranteed Lifetime Withdrawals Have Both Benefits and Risks, but Regulation Varies across States,” (GAO-13-75, December 2012, .pdf format, 37p.).
www.gao.gov/products/GAO-13-75
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November 30, 2012
A. “Active vs. Passive Decisions and Crowdout in Retirement Savings Accounts: Evidence from Denmark,” by Raj Chetty, John N. Friedman, Soren Leth-Petersen, Torben Nielsen, and Tore Olsen (w18565, November 2012, .pdf format, 74p.).
Abstract:
Do retirement savings policies – such as tax subsidies or employer-provided pension plans – increase total saving for retirement or simply induce shifting across accounts? We revisit this classic question using 45 million observations on savings for the population of Denmark. We find that a policy’s impact on total savings depends critically on whether it changes savings rates by active or passive choice. Tax subsidies, which rely upon individuals to take an action to raise savings, have small impacts on total wealth. We estimate that each $1 of tax expenditure on subsidies increases total saving by 1 cent. In contrast, policies that raise savings automatically even if individuals take no action – such as employer-provided pensions or automatic contributions to retirement accounts – increase wealth accumulation substantially. Price subsidies only affect the behavior of active savers who respond to incentives, whereas automatic contributions increase savings of passive individuals who do not reoptimize. We estimate that 85% of individuals are passive savers. The 15% of active savers who respond to price subsidies do so primarily by shifting assets across accounts rather than reducing consumption. These individuals also o set changes in automatic contributions and have higher wealth-income ratios. We conclude that automatic contributions are more effective at increasing total retirement savings than price subsidies for three reasons: (1) subsidies induce relatively few individuals to respond, (2) they generate substantial crowdout conditional on response, and (3) they do not influence the savings behavior of passive individuals, who are least prepared for retirement.
www.nber.org/papers/w18565
B. “What Makes Annuitization More Appealing?” by John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian, and Stephen P. Zeldes (w18575, November 2012, .pdf format, 25p.).
Abstract:
We conduct and analyze two large surveys of hypothetical annuitization choices. We find that allowing individuals to annuitize a fraction of their wealth increases annuitization relative to a situation where annuitization is an ‘all or nothing’ decision. Very few respondents choose declining real payout streams over flat or increasing real payout streams of equivalent expected present value. Highlighting the effects of inflation increases demand for cost of living adjustments. Frames that focus on flexibility, control, and investment risk significantly reduce annuitization. A majority of respondents prefer to receive an extra ‘bonus’ payment during one month of the year that is funded by slightly lower payments in the remaining months. Concerns about later-life income, spending flexibility, and counterparty risk are the most important self-reported motives that influence the annuitization decision, whereas the desire to leave a bequest has little influence on this decision.
www.nber.org/papers/w18575
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October 30, 2012
“Behavioral Biases and Long Term Care Annuities: A Political Economy Approach,” by Philippe De Donder and Marie-Louise Leroux (CESifo Working Paper No. 3972, October 2012, .pdf format, 38p.). Note: Links to the abstract and full-text can be found at:
www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19068534
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October 10, 2012
“Do Default and Longevity Annuities Improve Annuity Take-Up Rates? Results from an Experiment,” by Robert Gazzale, Sandy Mackenzie, and Lina Walker (October 2012, .pdf format, 28p.).
www.aarp.org/work/retirement-planning/info-10-2012/do-default-and-longevity-annuities-improve-annuity-take-up-rates-AARP-ppi-econ-sec.html
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September 14, 2012
Note: PRC requires free registration before providing working papers.
A. “The Evolution of Workplace Advice,” by Christopher L. Jones and Jason S. Scott (WP2012-10, September 2012, .pdf format, 28p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1026
B. “The Role of Guidance in the Annuity Decision Making Process,” by Kelli Hueler and Anna Rappaport (WP2012-11, September 2012, .pdf format, 38p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1027
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August 16, 2012
“Annuities and Your Nest Egg: Reforms to Promote Optimal Annuitization of Retirement Capital,” by Norma L. Nielson (Commentary 358, August 2012, .pdf format, 24p.).
www.cdhowe.org/annuities-and-your-nest-egg-reforms-to-promote-optimal-annuitization-of-retirement-capital/18601
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July 19, 2012
Note: PRC requires free registration before providing working papers. “Participating Payout Life Annuities: Lessons from Germany,” by Raimond Maurer, Ralph Rogalla, and Ivonne Siegelin (WP2012-03, July 2012, .pdf format, 32p.). Note: Links to the abstract and full-text can be found at:
www.pensionresearchcouncil.org/publications/document.php?file=1017
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June 19, 2012
A. “Older Americans’ Ambivalence Toward Annuities,” by Sandy Mackenzie (June 2012, .pdf format, 30p.).
www.aarp.org/work/retirement-planning/info-06-2012/older-americans-ambivalence-toward-annuities-AARP-ppi-econ-sec.html
B. “Medicare Part D’s Medication Therapy Management: Shifting from Neutral to Drive,” by N. Lee Rucker (June 2012, .pdf format, 12p.).
www.aarp.org/health/medicare-insurance/info-06-2012/medicare-part-d-mtm-AARP-ppi-health.html
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