Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7369744 | Journal of Public Economics | 2016 | 46 Pages |
Abstract
We show that tests for adverse selection in annuity markets using prices are not identified. Within the UK annuity market, different annuity products create the potential for a Rothschild-Stiglitz separating equilibrium as different risk types could choose different annuities. Empirical analyses using the “money's worth” suggest that prices are indeed consistent with this explanation. However, we show that this pattern of annuity prices would also result from the actions of regulated annuity providers who must reserve against cohort mortality risk. Annuity products that might attract different consumer risk types also have different risks for the provider.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Edmund Cannon, Ian Tonks,