Article

The Effect on Annuities Preference of Prompts to Consider Life Expectancy: Evidence from a UK Quota Sample

Citation

Robinson J & Comerford DA (2019) The Effect on Annuities Preference of Prompts to Consider Life Expectancy: Evidence from a UK Quota Sample. Economica. https://doi.org/10.1111/ecca.12326

Abstract
State-run pensions advice websites in the UK and the US recommend considering how long the pension needs to last and offer a life expectancy calculator for this purpose. Theories make conflicting predictions regarding the effect on annuities preference of following this recommendation. We asked a quota sample of over 2,000 UK residents to choose between an annuity or cashing out their pension. Immediately prior to choice, a random subset of participants were asked how long their retirement will last; others were asked what age they will live to; others were asked what age they will die by; and a control group was not asked to consider how long the pension needs to last. Asking about life expectancy reduced preference for annuities relative to the control condition. This research suggests that the reference to life expectancy on the UK’s pension advice website exacerbates underannuitization.

Notes
Output Status: Forthcoming/Available Online

Journal
Economica

StatusPublished
Publication date online26/11/2019
Date accepted by journal15/10/2019
URLhttp://hdl.handle.net/1893/30498
ISSN0013-0427
eISSN1468-0335