Why do we postpone annuity purchases?

Journal article: This paper seeks to explain why annuity purchases are postponed to a later age. We consider an overlapping generations model with uncertain lifetime and two types of annuities. It is shown that, if the economy is dynamically inefficient, individuals demand annuities without delay. However, if it is efficient, annuity purchases are postponed. We also show that these results are robust to several extensions.

Author(s)

Hippolyte d’Albis, Andrei Kalk

Journal
  • Journal of Mathematical Economics
Date of publication
  • 2021
Keywords JEL
D14 E13 G22
Keywords
  • Annuity purchases
  • Overlapping generations
  • Postvponement
  • Annuity pricing
Version
  • 1
Volume
  • 95