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Why Don't People Insure Late Life Consumption: A Framing Explanation of the Under-Annuitization Puzzle / Jeffrey R. Brown, Jeffrey R. Kling, Sendhil Mullainathan, Marian V. Wrobel.
- Format:
- Book
- Author/Creator:
- Brown, Jeffrey R.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w13748.
- NBER working paper series no. w13748
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Why Don't People Insure Late Life Consumption
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2008.
- Summary:
- Rational models of risk-averse consumers have difficulty explaining limited annuity demand. We posit that consumers evaluate annuity products using a narrow "investment frame" that focuses on risk and return, rather than a "consumption frame" that considers the consequences for lifelong consumption. Under an investment frame, annuities are quite unattractive, exhibiting high risk without high returns. Survey evidence supports this hypothesis: whereas 72 percent of respondents prefer a life annuity over a savings account when the choice is framed in terms of consumption, only 21 percent of respondents prefer it when the choice is framed in terms of investment features.
- Notes:
- Print version record
- January 2008.
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