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On the Public Economics of Annuities with Differential Mortality

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This paper studies the problem of redistribution between individuals having different mortality rates. We use a continuous time model in which there are two types of individuals characterized by different survival probability paths. Individual preferences are represented by a generalized life-cycle utility function which can exhibit temporal risk aversion. We successively compare utilitarian allocations when individuals exhibit temporal risk neutrality and temporal risk aversion. This problem is analyzed in the contexts of full information and asymmetric information on mortality rates.

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  • Antoine Bommier & Marie-Louise Leroux & Jean-Marie Lozachmeur, 2010. "On the Public Economics of Annuities with Differential Mortality," CER-ETH Economics working paper series 10/135, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    • Handle: RePEc:eth:wpswif:10-135
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    4. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2010. "Collective Annuities and Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 23-41, February.
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    Cited by:

    1. Barigozzi, Francesca & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2023. "Gender wage and longevity gaps and the design of retirement systems," Journal of Economic Behavior & Organization, Elsevier, vol. 209(C), pages 263-287.
    2. Jonas Klos & Tim Krieger & Sven Stöwhase, 2022. "Measuring intra-generational redistribution in PAYG pension schemes," Public Choice, Springer, vol. 190(1), pages 53-73, January.
    3. Dávila, Julio & Leroux, Marie-Louise, 2015. "Efficiency in overlapping generations economies with longevity choices and fair annuities," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 363-383.
    4. Pierre Pestieau & Gregory Ponthiere, 2014. "Policy Implications of Changing Longevity," CESifo Economic Studies, CESifo Group, vol. 60(1), pages 178-212.
    5. FLEURBAEY, Marc & LEROUX, Marie - Louise & PONTHIERE, Gregory, 2010. "Compensating the dead? Yes we can!," LIDAM Discussion Papers CORE 2010066, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Delprat, G. & Leroux, M.-L. & Michaud, P.-C., 2016. "Evidence on individual preferences for longevity risk," Journal of Pension Economics and Finance, Cambridge University Press, vol. 15(2), pages 160-179, April.
    7. Leroux, M.-L. & Pestieau, P. & Ponthiere, G., 2011. "Longevity, genes and efforts: An optimal taxation approach to prevention," Journal of Health Economics, Elsevier, vol. 30(1), pages 62-76, January.
    8. Pashchenko, Svetlana & Porapakkarm, Ponpoje & Jang, Youngsoo, 2023. "Mortality Regressivity and Pension Design," MPRA Paper 117936, University Library of Munich, Germany.
    9. Fleurbaey, Marc & Leroux, Marie-Louise & Ponthiere, Gregory, 2014. "Compensating the dead," Journal of Mathematical Economics, Elsevier, vol. 51(C), pages 28-41.
    10. Leroux, Marie-Louise & Ponthiere, Gregory, 2013. "Utilitarianism and unequal longevities: A remedy?," Economic Modelling, Elsevier, vol. 30(C), pages 888-899.
    11. Helmuth Cremer & Jean‐Marie Lozachmeur & Pierre Pestieau, 2010. "Collective Annuities and Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(1), pages 23-41, February.
    12. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    13. Antoine Bommier, 2013. "Life-Cycle Preferences Revisited," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1290-1319, December.
    14. Marie-Louise Leroux & Grégory Ponthière, 2009. "Wives, husbands and wheelchairs: Optimal tax policy under gender-specific health," Working Papers halshs-00575059, HAL.
    15. Torben M. Andersen & Marias H. Gestsson, 2010. "Longevity, Growth and Intergenerational Equity - The Deterministic Case," Economics wp52, Department of Economics, Central bank of Iceland.
    16. Alonso-García, Jennifer & Devolder, Pierre, 2019. "Continuous time model for notional defined contribution pension schemes: Liquidity and solvency," Insurance: Mathematics and Economics, Elsevier, vol. 88(C), pages 57-76.

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    More about this item

    Keywords

    Uncertain Lifetime; Redistribution; Annuities; Nonlinear Taxation;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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