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Journal of Pension Economics and Finance
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Article . 2013 . Peer-reviewed
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Article . 2013 . Peer-reviewed
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Article . 2013 . Peer-reviewed
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Research . 2013
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Research . 2013
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Evidence on Individual Preferences for Longevity Risk

Authors: Delprat, Gaëtan; Leroux, Marie-Louise; Michaud, Pierre-Carl;

Evidence on Individual Preferences for Longevity Risk

Abstract

AbstractThe standard model of intertemporal choice assumes risk neutrality towards the length of life: under additivity of lifetime utility and expected utility assumptions, agents are not sensitive to a mean preserving spread in the length of life. Using a survey fielded in the RAND American Life Panel, this paper provides empirical evidence on possible deviation from risk neutrality with respect to longevity in the US population. The questions we ask allow to find the distribution as well as to quantify the degree of risk aversion with respect to the length of life in the population. We find evidence that roughly 75% of respondents were not neutral with respect to longevity risk. Hence, there is a little empirical support for the joint use of the expected utility and additive lifetime utility assumptions in life-cycle models. Higher income households are more likely to be risk averse towards the length of life. We do not find evidence that the degree of risk aversion varies with age or education.

Keywords

risk aversion toward the length of life, intertemporal choice, stated-preference, J26, risk aversion toward the length of life, ddc:330, intertemporal choice, intertemporal choice, risk aversion toward the length of life, stated-preference, stated-preference, Intertemporal choice, Risk aversion toward the Length of Life, Stated-Preference, D91, D12, I10, jel: jel:D91, jel: jel:D12, jel: jel:I10, jel: jel:J26

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    popularity
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    influence
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
10
Top 10%
Average
Average
bronze