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More on the Origin of Financial Economics: Early Contributions to Joint Life Annuity Valuation

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  • Poitras, Geoffrey

Abstract

The origin of modern financial economics can be traced to early discounted expected value solutions for the price of life annuities. In contrast to the single life annuity valuations attributed to de Witt and Halley, the computational complexity of joint life annuity valuation posed difficulties. Following a brief review of various joint life annuity specifications, a history of joint life annuity issuance and valuation in northern Europe from the 13th to the mid-18th century is provided. With this background, the 1671 correspondence from de Witt to Hudde on possible methods for valuing joint life annuities is detailed. These methods are contrasted with the geometric method described in Halley (1693); providing impetus for examination of the analytical approximations developed by de Moivre and Simpson.

Suggested Citation

  • Poitras, Geoffrey, 2024. "More on the Origin of Financial Economics: Early Contributions to Joint Life Annuity Valuation," SocArXiv ak6gu, Center for Open Science.
    • Handle: RePEc:osf:socarx:ak6gu
    DOI: 10.31219/osf.io/ak6gu
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    References listed on IDEAS

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    3. Velde, François R. & Weir, David R., 1992. "The Financial Market and Government Debt Policy in France, 1746–1793," The Journal of Economic History, Cambridge University Press, vol. 52(1), pages 1-39, March.
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