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What matters in the annuitization decision?

Author

Listed:
  • Mohamad Hassan Abou Daya

    (Grenoble Ecole de Management)

  • Carole Bernard

    (Grenoble Ecole de Management
    Faculty of Economics at Vrije Universiteit Brussel)

Abstract

We perform a simultaneous test for several rational and behavioral factors known to affect the uptake of life annuities in a sample of Americans. We also investigate whether analysts’ short-term stock market expectations affect the decision to annuitize retirement wealth. We find that facing such expectations without trusting them lowers the purchase of annuities. Moreover, we find that individuals who trusted financial analysts’ expectations were less likely to purchase annuities. We attribute these findings to the availability heuristic and present bias, respectively. Finally, we discuss the mediating role of annuity antipathy. Our results provide guidance for policy-makers and annuity providers and offer venues for future research.

Suggested Citation

  • Mohamad Hassan Abou Daya & Carole Bernard, 2022. "What matters in the annuitization decision?," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 158(1), pages 1-12, December.
    • Handle: RePEc:spr:sjecst:v:158:y:2022:i:1:d:10.1186_s41937-022-00094-4
    DOI: 10.1186/s41937-022-00094-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Annuities demand; Trust in financial analysts; Multiple factors test;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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