The Economic Theory of Annuities
eBook - PDF

The Economic Theory of Annuities

  1. 184 pages
  2. English
  3. PDF
  4. Available on iOS & Android
eBook - PDF

The Economic Theory of Annuities

Book details
Table of contents
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About This Book

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.

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Information

Publisher
Princeton University Press
Year
2021
ISBN
9781400829422
Topic
Economics
Subtopic
Economic Theory
Index
Economics

Table of contents

  1. Cover Page
  2. Half-title Page
  3. Title Page
  4. Copyright Page
  5. Dedication Page
  6. Contents
  7. Preface
  8. Chapter 1: Introduction
  9. Chapter 2: Benchmark Calculations: Savings and Retirement
  10. Chapter 3: Survival Functions, Stochastic Dominance, and Changes in Longevity
  11. Chapter 4: Life Cycle Model with Longevity Risk: First Best and Competitive Equilibrium
  12. Chapter 5: Comparative Statics, Discounting, Partial Annuitization, and No Annuities
  13. Chapter 6: Subjective Beliefs and Survival Probabilities
  14. Chapter 7: Moral Hazard
  15. Chapter 8: Uncertain Future Survival Functions
  16. Chapter 9: Pooling Equilibrium and Adverse Selection
  17. Chapter 10: Income Uncertainty
  18. Chapter 11: Life Insurance and Differentiated Annuities
  19. Chapter 12: Annuities, Longevity, and Aggregate Savings
  20. Chapter 13: Utilitarian Pricing of Annuities
  21. Chapter 14: Optimum Taxation in Pooling Equilibria
  22. Chapter 15: Bundling of Annuities and Other Insurance Products
  23. Chapter 16: Financial Innovation—Refundable Annuities (Annuity Options)
  24. References
  25. Index