Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297029 
Year of Publication: 
2024
Series/Report no.: 
Working Paper No. 2024:4
Publisher: 
Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala
Abstract: 
This study examines the simultaneous impact of risk type and risk preferences on annuity demand. Through a quasi-experimental design that leverages individuals' reactions to their first malignant cancer diagnosis around retirement, we show that a 30% reduction in the present value of life annuities from decreased life expectancy results in just a 5% decline in annuitization rates. We further demonstrate that risk-averse individuals drive this effect, whereas the risk-tolerant remain unchanged in their demand. Our findings suggest that risk-averse individuals view life annuities as a means to ensure against longevity risk.
Subjects: 
Annuity puzzle
Adverse selection
Advantageous selection
Health shocks
JEL: 
G50
G52
D12
D14
Document Type: 
Working Paper

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