The Economic Theory of Annuities Eytan Sheshinski.

Format:

Book

Author/Creator:

Sheshinski, Eytan, Auteur.

Language:

English

Subjects (All):

Annuities.

Annuites.

Physical Description:

1 online resource (186 pages) : illustrations

Place of Publication:

Woodstock, Oxfordshire [England] : Princeton University Press, 2008.

Language Note:

English

Summary:

Annuities are financial products that guarantee the holder a fixed return so long as the holder remains alive, thereby providing insurance against lifetime uncertainty. The terms of these contracts depend on the information available to insurance firms. Unlike age and gender, information about individual survival probabilities cannot be readily ascertained. This asymmetric information causes market inefficiencies, such as adverse selection. Groundbreaking in its scope, The Economic Theory of Annuities offers readers a theoretical analysis of the functioning of private annuity markets. Starting with a general analysis of survival functions, stochastic dominance, and characterization of changes in longevity, Eytan Sheshinski derives the demand for annuities using a model of individuals who jointly choose their lifetime consumption and retirement age. The relation between life insurance and annuities that have a bequest option is examined and "annuity options" are proposed as a response to the lack of secondary markets. This book also investigates the macroeconomic policy implications of annuities and changes in longevity on aggregate savings. Sheshinski utilizes statistical population theory to shed light on the debate of whether the surge in savings and growth in Asia and other countries can be attributed to higher longevity of the population and whether this surge is durable. This book shows how understanding annuities becomes essential as governments that grapple with insolvency of public social security systems place greater emphasis on individual savings accounts.

Contents:

Introduction

Benchmark calculations : savings and retirement

Survival functions, stochastic dominance, and changes in longevity

Life cycle model with longevity risk : first best and competitive equilibrium

Comparative statics, discounting, partial annuitization, and no annuities

Subjective beliefs and survival probabilities

Moral hazard

Uncertain future survival functions

Pooling equilibrium and adverse selection

Income uncertainty

Life insurance and differentiated annuities

Annuities, longevity, and aggregate savings

Utilitarian pricing of annuities

Optimum taxation in pooling equilibria

Bundling of annuities and other insurance products

Financial innovation : refundable annuities (annuity options).

Notes:

Bibliographic Level Mode of Issuance: Monograph

Includes bibliographical references and index.

Description based on print version record.

Contains:

Financial innovation : refundable annuities (annuity options)

Bundling of annuities and other insurance products.

Optimum taxation in pooling equilibria.

Utilitarian pricing of annuities.

Annuities, longevity, and aggregate savings.

Life insurance and differentiated annuities.

Income uncertainty.

Pooling equilibrium and adverse selection.

Uncertain future survival functions.

Moral hazard.

Subjective beliefs and survival probabilities.

Comparative statics, discounting, partial annuitization, and no annuities.

Life cycle model with longevity risk : first best and competitive equilibrium.

Survival functions, stochastic dominance, and changes in longevity.

Benchmark calculations : savings and retirement.

Introduction.

ISBN:

9781400829422

1400829429

OCLC:

1245668543