Arbeitspapier
The tragedy of annuitization
We construct a tractable discrete-time overlapping generations model of a closed economy and use it to study government redistribution of accidental bequests and private annuities in general equilibrium. Individuals face longevity risk as there is a positive probability of passing away before the retirement period. We find non-pathological cases where it is better for long-run welfare to waste accidental bequests than to give them to the elderly. Next we study the introduction of a perfectly competitive life insurance market offering actuarially fair annuities. There exists a tragedy of annuitization: although full annuitization of assets is privately optimal it is not socially beneficial due to adverse general equilibrium repercussions.
- Sprache
-
Englisch
- Erschienen in
-
Series: Reihe Ökonomie / Economics Series ; No. 268
- Klassifikation
-
Wirtschaft
Incomplete Markets
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
General Aggregative Models: General
Demand and Supply of Labor: General
- Thema
-
longevity risk
risk sharing
overlapping generations
intergenerational transfers
annuity markets
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Heijdra, Ben J.
Mierau, Jochen O.
Reijnders, Laurie S. M.
- Ereignis
-
Veröffentlichung
- (wer)
-
Institute for Advanced Studies (IHS)
- (wo)
-
Vienna
- (wann)
-
2011
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Heijdra, Ben J.
- Mierau, Jochen O.
- Reijnders, Laurie S. M.
- Institute for Advanced Studies (IHS)
Entstanden
- 2011
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